Core Insights - Cirrus Logic Inc. reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of $1.51, exceeding the Zacks Consensus Estimate by 41% and up from $1.12 in the prior-year quarter [1][10] - The company generated revenues of $407.3 million, reflecting a 9% year-over-year growth, driven by strong demand for its custom boosted audio amplifier and newly introduced 22-nanometer smart codec [2][10] - The long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding high-performance mixed-signal solutions, and leveraging expertise to enter new markets [3] Revenue Performance - Revenue growth was primarily attributed to strong customer demand, although there was a sequential decline of 4% due to decreased smartphone shipment volumes [2] - The top line exceeded management's guidance of $330-$390 million and the consensus estimate of $364 million [2] Segment Analysis - The High-Performance Mixed-Signal segment contributed 41% to total revenues, growing 7.9% year over year to $167.2 million, while the Audio segment's sales increased 9.6% to $240 million, contributing 59% to total revenues [7] - The company is expanding into applications such as laptops, gaming, tablets, and AR/VR [6] Customer Concentration - The largest customer accounted for 86% of total revenues in the fiscal first quarter, indicating a high level of customer concentration [5] Margin and Expenses - Non-GAAP gross margin was 52.6%, up from 50.6% in the prior-year quarter, but down from 53.5% sequentially [11] - Non-GAAP operating expenses rose 1.2% year over year to $119.5 million, while non-GAAP operating income increased 33.3% year over year to $94.8 million [12] Cash Flow and Share Repurchase - The company ended the fiscal first quarter with cash and marketable securities of $614.8 million, up from $595.8 million [14] - Cirrus Logic repurchased almost 1 million shares worth $100 million during the reported quarter [15] Future Outlook - For fiscal Q2 2026, the company anticipates revenues between $510 million and $570 million, projecting a strong sequential uptick in customer demand, particularly in smartphones [16]

Core Insights - Cirrus Logic reported strong fiscal Q1 results, with non-GAAP earnings per share of $1.51 and GAAP revenue of $407.3 million, both exceeding Wall Street expectations [1][5][9] Financial Performance - Non-GAAP EPS of $1.51 surpassed the estimate of $1.01, reflecting a year-over-year increase of 34.8% from $1.12 in Q1 FY25 [2] - GAAP revenue reached $407.3 million, an 8.9% increase from $374.0 million in Q1 FY25 [2] - Gross margin improved to 52.6%, up 2.0 percentage points from 50.6% in the previous year [2][8] - Free cash flow surged to $113.4 million, a significant increase of 1,961.8% from $5.5 million in Q1 FY25 [2] Business Segments - Revenue from audio products was $240.0 million, up from $219.0 million in Q1 FY25, while high-performance mixed-signal chip sales reached $167.2 million [6] - The company is diversifying its revenue streams, with expectations for laptop market revenue to double in FY26 compared to FY25 [7] - New product offerings include high-performance digital-to-analog converters and advanced audio codecs aimed at professional audio and automotive systems [7] Customer Concentration and Strategy - Cirrus Logic's revenue is heavily reliant on Apple, which accounted for approximately 89% of annual net sales in FY25 [4] - The company focuses on sustained R&D investment to maintain its competitive edge in audio innovation and expand into new markets [4] Future Outlook - Management forecasts Q2 FY26 revenue between $510 million and $570 million, indicating strong sequential growth [9] - Gross margin is expected to remain stable at 51% to 53% for Q2 FY26, with projected non-GAAP operating expenses of $131 million to $137 million [9] - The company aims to reduce its reliance on Apple, with general market revenue potentially reaching 10% of total sales in the future [10]

Financial Data and Key Metrics Changes - In Q1 fiscal 2026, the company reported revenue of $407.3 million, exceeding the top end of guidance, driven by strong smartphone demand [6][14] - Sequentially, revenue decreased by 4% primarily due to lower smartphone unit volumes [14] - Year-over-year, sales increased by 9%, attributed to the latest generation products and higher smartphone unit volumes [14] - Non-GAAP gross profit was $214.3 million with a gross margin of 52.6%, reflecting a favorable product mix year-over-year [15] - Non-GAAP operating income was $94.9 million, representing 23.3% of revenue [18] - Non-GAAP net income was $80.3 million, resulting in earnings per share of $1.51 [18] - The company ended the quarter with $847.8 million in cash and investments, up $12.9 million from the prior quarter [19] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw positive impacts from new custom boosted amplifiers and a 22nm smart codec [7][8] - The camera controller product line continued to perform well, indicating potential for further value addition [10] - The company ramped production of new ADCs, DACs, and an ultra-high-performance audio codec, expanding its professional audio portfolio [12] Market Data and Key Metrics Changes - Strong engagement with laptop customers was noted, with new PC amplifiers and codecs designed into several laptops expected to ship in late calendar 2025 [11] - The automotive market remains in early stages, with ongoing efforts to reinvigorate product offerings [31] Company Strategy and Development Direction - The company aims to maintain leadership in smartphone audio, expand high-performance mixed-signal solutions, and leverage expertise in new markets [7] - Investments are being made in battery, power, and sensing technologies to diversify revenue streams [10] - The company is focusing on enhancing audio experiences in laptops and addressing challenges in the automotive sector [11][31] Management Comments on Operating Environment and Future Outlook - Management highlighted strong smartphone demand as a key driver of performance, with expectations for continued robust demand [27] - The company anticipates a shift in sales seasonality towards the first half of the fiscal year due to various factors, including camera content shipping earlier [41][44] - The impact of new legislation on R&D expenditures is being evaluated, but not yet reflected in guidance [22] Other Important Information - The company utilized $100 million for share repurchases in Q1, with $454.1 million remaining on its repurchase authorization [20] - Guidance for Q2 fiscal 2026 expects revenue between $510 million and $570 million, with a gross margin of 51% to 53% [21] Q&A Session Summary Question: What drove the significant delta between expected and actual results? - Management attributed the delta to strong smartphone demand and increased content shipping, with some contribution from tariff-related pull-ins [27][28] Question: How is the diversification effort outside the largest customer progressing? - Management expressed excitement about automotive opportunities and noted strong engagement in the PC market, with expectations for revenue growth [30][31][34] Question: How should the seasonality of revenue be viewed? - Management indicated a potential shift to a 45-55 profile for revenue distribution between the first and second halves of the year, influenced by camera content and pull-ins [50] Question: Are there new AI opportunities being explored? - Management sees potential in voice-centric devices and power-efficient technologies to support AI features, aiming to enhance user experiences across devices [47][48]

Financial Data and Key Metrics Changes - In Q1 fiscal 2026, the company reported revenue of $407.3 million, exceeding the top end of guidance, driven by strong smartphone demand [6][14] - Sequentially, revenue decreased by 4% primarily due to lower smartphone unit volumes [14] - Year-over-year, sales increased by 9%, attributed to the latest generation products and higher smartphone unit volumes [14] - Non-GAAP gross profit was $214.3 million with a gross margin of 52.6%, showing a decrease sequentially due to a less favorable product mix [15] - Non-GAAP operating income was $94.9 million, representing 23.3% of revenue [16] - Non-GAAP net income was $80.3 million, resulting in earnings per share of $1.51 [17] - The company ended the quarter with $847.8 million in cash and investments, up $12.9 million from the prior quarter [18] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw positive impacts from new products, including a custom boosted amplifier and a 22nm smart codec [7][8] - The camera controller product line continued to perform well, indicating potential for further growth in system performance and advanced camera functionality [10] - The company ramped production of new ADCs, DACs, and an ultra-high-performance audio codec, expanding its professional audio portfolio [12] Market Data and Key Metrics Changes - The company is experiencing strong engagement with laptop customers, with new products expected to ship in late calendar 2025 [11] - The automotive market remains in early stages, with ongoing efforts to reinvigorate product offerings [30] - The company is expanding its general market business across professional audio, automotive, industrial, and imaging end markets [12] Company Strategy and Development Direction - The long-term growth strategy is based on maintaining leadership in smartphone audio, expanding mixed-signal solutions, and leveraging expertise in new markets [7] - The company aims to diversify revenue streams by enhancing capabilities in battery, power, and sensing technologies [10] - Collaborations, such as with Compound, aim to address audio challenges in laptops, indicating a focus on improving customer experiences [11] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand for smartphones, which significantly impacted performance, with no unexpected content surprises [25] - The company anticipates a shift in sales seasonality, with more weight towards the first half of the fiscal year [20][42] - The recent legislation regarding R&D expenditures is under evaluation for its impact on future guidance [21] Other Important Information - The company utilized $100 million for share repurchases in Q1, with $454.1 million remaining on its repurchase authorization [19] - The company will participate in the KeyBank Technology Leadership Forum on August 12 [52] Q&A Session Summary Question: What drove the delta between expected and actual results? - Management attributed the delta to strong smartphone demand and increased content shipping, with some pull-in effects from customer demand [25][26] Question: How is the diversification effort outside the largest customer progressing? - Management expressed excitement about automotive opportunities and noted ongoing design activity in the PC space, with expectations for revenue growth [28][30] Question: Can you qualify the magnitude of the volume and content differential? - Management indicated that several factors, including pull-ins and longer supply chain processes for camera content, are influencing the seasonality of demand [39][41] Question: Are there new AI opportunities being explored? - Management highlighted the potential for AI features in voice-centric devices and emphasized the importance of power efficiency in supporting AI applications [45][46]

Company Overview - Cirrus Logic was founded in 1984 and is listed on NASDAQ as CRUS[5] - The company's FY25 revenue was $1.90 billion[5] - Cirrus Logic has approximately 4,210 pending and issued patents worldwide[5] Growth Strategy - The company's three-pronged strategy includes maintaining its leadership in smartphone audio, increasing HPMS content in smartphones, and expanding into additional applications and markets[22] - Cirrus Logic is expanding its SAM (Serviceable Available Market) in a vast mixed-signal market, projecting the audio and high-performance mixed-signal market to reach $8.5 billion in 2029, compared to $6.8 billion in 2025[24] - The company is focused on expanding into laptops, tablets, wearables, gaming, and AR/VR, as well as professional audio, automotive, industrial, and imaging end markets[35] - The PC SAM (Serviceable Available Market) is approximately $1.2 billion, comprising ~$440 million in audio SAM and ~$800 million in HPMS SAM[37] Financial Performance - In Q1 FY26, Cirrus Logic's revenue was $407.3 million, with a gross margin of 52.6% and combined R&D/SG&A expenses of $141.6 million[48] - The company's Q2 FY26 guidance projects revenue between $510 million and $570 million, with a gross margin between 51% and 53% and combined R&D/SG&A expenses between $153 million and $159 million[48] - In Q1 FY26, the company's largest customer represented 86% of total revenue[52] - The company generated $1.7 billion of operating cash flow over the last 5 full fiscal years[58]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated condensed financial statements and management's discussion and analysis for the quarter ended June 28, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Cirrus Logic's unaudited consolidated financial statements and detailed notes for the quarter ended June 28, 2025 [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Condensed Balance Sheets | Metric | June 28, 2025 (in thousands) | March 29, 2025 (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------- | | Total Assets | $2,294,717 | $2,327,073 | | Total Current Assets | $1,241,122 | $1,239,734 | | Total Liabilities | $364,433 | $377,624 | | Total Stockholders' Equity | $1,930,284 | $1,949,449 | [Consolidated Condensed Statements of Income](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) This section details the company's revenues, expenses, and net income over a specific period Consolidated Condensed Statements of Income | Metric | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | YoY Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------- | | Net Sales | $407,272 | $374,026 | 8.9% | | Gross Profit | $214,030 | $188,925 | 13.3% | | Income from Operations | $72,394 | $46,792 | 54.7% | | Net Income | $60,697 | $42,095 | 44.2% | | Basic EPS | $1.17 | $0.79 | 48.1% | | Diluted EPS | $1.14 | $0.76 | 50.0% | [Consolidated Condensed Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income) This section presents the company's net income and other comprehensive income components Consolidated Condensed Statements of Comprehensive Income | Metric | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net Income | $60,697 | $42,095 | | Foreign Currency Translation Gain (Loss) | $769 | $(358) | | Unrealized Gain (Loss) on Marketable Securities | $242 | $(358) | | Comprehensive Income | $61,657 | $41,454 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities Consolidated Condensed Statements of Cash Flows | Metric | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net Cash Provided by Operating Activities | $116,131 | $87,161 | | Net Cash Used in Investing Activities | $(6,215) | $(66,559) | | Net Cash Used in Financing Activities | $(100,666) | $(32,015) | | Net Increase (Decrease) in Cash and Cash Equivalents | $9,250 | $(11,413) | | Cash and Cash Equivalents at End of Period | $548,870 | $491,351 | [Consolidated Condensed Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Stockholders%27%20Equity) This section details changes in the company's equity, including net income, stock repurchases, and stock-based compensation Consolidated Condensed Statements of Stockholders' Equity | Metric | June 28, 2025 (in thousands) | March 29, 2025 (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------- | | Total Stockholders' Equity | $1,930,284 | $1,949,449 | | Accumulated Earnings | $49,035 | $90,351 | | Repurchase and Retirement of Common Stock (Q1 FY26) | $(100,965) | N/A | | Stock-based Compensation (Q1 FY26) | $20,809 | N/A | [Notes to Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and estimates used in preparing the financial statements - The unaudited consolidated condensed financial statements are prepared in accordance with U.S. GAAP and SEC rules, requiring management estimates and assumptions[26](index=26&type=chunk) [Note 2. Recently Issued Accounting Pronouncements](index=8&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Pronouncements) This note discusses new accounting standards and their potential impact on the company's financial reporting - The Company is evaluating ASU 2023-09 (Income Taxes), effective for annual periods after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years after December 15, 2026[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 3. Marketable Securities](index=8&type=section&id=Note%203.%20Marketable%20Securities) This note provides details on the company's marketable securities, including fair value and unrealized gains/losses Marketable Securities | Metric | June 28, 2025 (in thousands) | March 29, 2025 (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------- | | Total Securities (Fair Value) | $298,884 | $295,196 | | Gross Unrealized Gains | $1,881 | $1,680 | | Gross Unrealized Losses | $(17) | $(58) | - The Company classifies investments as available-for-sale securities; no investments were considered impaired as of June 28, 2025[29](index=29&type=chunk)[31](index=31&type=chunk) [Note 4. Fair Value of Financial Instruments](index=9&type=section&id=Note%204.%20Fair%20Value%20of%20Financial%20Instruments) This note explains the valuation methodologies and inputs used for financial instruments measured at fair value Fair Value of Financial Instruments | Asset Category (June 28, 2025) | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | | :----------------------------- | :--------------------- | :--------------------- | :------------------- | | Money Market Funds | $500,160 | $0 | $500,160 | | Corporate Debt Securities | $0 | $290,165 | $290,165 | | U.S. Treasury Securities | $8,719 | $0 | $8,719 | - The Company measures cash equivalents and marketable securities at fair value using Level 1 and Level 2 inputs; no Level 3 assets or liabilities were held[35](index=35&type=chunk)[38](index=38&type=chunk) [Note 5. Derivative Financial Instruments](index=10&type=section&id=Note%205.%20Derivative%20Financial%20Instruments) This note describes the company's use of derivatives to manage financial risks, primarily foreign currency exposure Derivative Financial Instruments | Metric | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Gain (loss) from Foreign Currency Forward Contracts | $1,164 | $(32) | - The Company uses foreign currency forward contracts to reduce the earnings impact of exchange rate fluctuations, recognizing gains and losses in 'Other income (expense)'[40](index=40&type=chunk) [Note 6. Accounts Receivable, net](index=11&type=section&id=Note%206.%20Accounts%20Receivable%2C%20net) This note provides a breakdown of accounts receivable and the allowance for doubtful accounts Accounts Receivable, Net | Metric | June 28, 2025 (in thousands) | March 29, 2025 (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------- | | Gross Accounts Receivable | $214,085 | $216,009 | | Allowance for Doubtful Accounts | $0 | $0 | | Accounts Receivable, Net | $214,085 | $216,009 | [Note 7. Inventories](index=11&type=section&id=Note%207.%20Inventories) This note details the composition of the company's inventory, including work in process and finished goods Inventories | Metric | June 28, 2025 (in thousands) | March 29, 2025 (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------- | | Work in Process | $189,990 | $216,173 | | Finished Goods | $88,994 | $82,919 | | Total Inventories | $278,984 | $299,092 | [Note 8. Revolving Credit Facility](index=11&type=section&id=Note%208.%20Revolving%20Credit%20Facility) This note describes the company's credit facility, its terms, and outstanding balances - The Company has a **$300 million** senior secured revolving credit facility maturing on July 8, 2026, with no outstanding amounts as of June 28, 2025[45](index=45&type=chunk)[50](index=50&type=chunk) - The facility's benchmark interest rate was updated from LIBOR to Term SOFR in March 2023[46](index=46&type=chunk) [Note 9. Revenues](index=12&type=section&id=Note%209.%20Revenues) This note disaggregates revenue by product line and geographic region, highlighting key sales drivers Revenues by Product Line | Product Line | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Audio Products | $240,043 | $218,970 | | HPMS Products | $167,229 | $155,056 | | Total Net Sales | $407,272 | $374,026 | Revenues by Geographic Region | Geographic Region | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :---------------- | :------------------------------------ | :------------------------------------ | | China | $189,955 | $205,708 | | United States | $4,648 | $5,216 | | Rest of World | $212,669 | $163,102 | [Note 10. Income Taxes](index=12&type=section&id=Note%2010.%20Income%20Taxes) This note provides details on income tax provision, effective tax rates, and significant tax-related developments Income Taxes | Metric | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Income before Income Taxes | $80,628 | $56,603 | | Provision for Income Taxes | $19,931 | $14,508 | | Effective Tax Rate | 24.7% | 25.6% | - Effective tax rates were unfavorably impacted by R&D capitalization requirements and U.S. tax rules on refundable tax credits[56](index=56&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently eliminates the U.S. R&D capitalization requirement, with effects expected in Q2 FY26[57](index=57&type=chunk) - The Company is disputing IRS proposed adjustments of **$168.3 million** in additional tax and **$63.7 million** in penalties related to transfer pricing for fiscal years 2017-2019[61](index=61&type=chunk) [Note 11. Net Income Per Share](index=14&type=section&id=Note%2011.%20Net%20Income%20Per%20Share) This note presents the calculation of basic and diluted net income per share Net Income Per Share | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net Income (in thousands) | $60,697 | $42,095 | | Basic Earnings Per Share | $1.17 | $0.79 | | Diluted Earnings Per Share | $1.14 | $0.76 | | Diluted Weighted Average Common Shares Outstanding (in thousands) | 53,319 | 55,665 | [Note 12. Commitments and Contingencies](index=14&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations and potential future liabilities - The Company has a Capacity Reservation Agreement with GlobalFoundries for wafer supply through 2026, with a remaining **$15 million** non-refundable fee and **$62 million** prepayment balance[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 13. Legal Matters](index=14&type=section&id=Note%2013.%20Legal%20Matters) This note discusses ongoing legal proceedings and management's assessment of their potential impact - Management believes no pending legal matters will have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows[68](index=68&type=chunk) [Note 14. Stockholders' Equity](index=15&type=section&id=Note%2014.%20Stockholders%27%20Equity) This note details changes in stockholders' equity, including share repurchase programs and related tax implications - The Board authorized a new **$500 million** share repurchase program in March 2025, with approximately **$454.1 million** remaining as of June 28, 2025[71](index=71&type=chunk) - During the quarter, the Company repurchased **1.0 million shares** for **$100.0 million** at an average cost of **$98.66 per share**[71](index=71&type=chunk) - Net stock repurchases are subject to a **1% excise tax** under the Inflation Reduction Act[70](index=70&type=chunk) [Note 15. Segment Information](index=15&type=section&id=Note%2015.%20Segment%20Information) This note provides financial information by operating segment and disaggregated revenue by product and geography - The Company operates as one reportable segment, disaggregating revenue into Audio and High-Performance Mixed-Signal (HPMS) product lines[73](index=73&type=chunk) Operating Expenses by Category | Operating Expense Category | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :------------------------- | :------------------------------------ | :------------------------------------ | | Personnel-related | $88,318 | $84,501 | | Product development | $13,731 | $14,916 | | Other segment items | $39,587 | $42,716 | | Total Operating Expense | $141,636 | $142,133 | Sales by Geographic Area | Geographic Area | Three Months Ended June 28, 2025 (in thousands) | Three Months Ended June 29, 2024 (in thousands) | | :-------------- | :------------------------------------ | :------------------------------------ | | China | $189,955 | $205,708 | | India | $75,429 | $38,032 | | Hong Kong | $49,175 | $41,649 | | Vietnam | $36,263 | $26,283 | | South Korea | $32,893 | $38,883 | | United States | $4,648 | $5,216 | | Rest of World | $18,909 | $18,255 | | Total Sales | $407,272 | $374,026 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=16&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial performance and condition for the quarter ended June 28, 2025, highlighting sales growth, liquidity, and operational strategies [Overview](index=17&type=section&id=Overview) This section introduces Cirrus Logic's business, strategic focus, and recent operational achievements - Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions for mobile and consumer applications[81](index=81&type=chunk) - The Company's strategy focuses on maintaining smartphone audio leadership, increasing HPMS content in smartphones, and expanding into new applications and markets[82](index=82&type=chunk) - Recent achievements include success with latest-generation smartphone audio components, traction in the laptop market, and ramping production of general market products[82](index=82&type=chunk) [Critical Accounting Policies and Estimates](index=17&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the key accounting judgments and assumptions that significantly impact the financial statements - No significant changes to critical accounting estimates or policies were reported for the three months ended June 28, 2025[84](index=84&type=chunk) [Recently Issued Accounting Pronouncements](index=17&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to disclosures about new accounting standards and their potential effects on the company - Refer to Note 2 of the Notes to the Consolidated Condensed Financial Statements for a discussion of recently issued accounting pronouncements[85](index=85&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross margin, and operating expenses Results of Operations Summary | Metric | Three Months Ended June 28, 2025 (%) | Three Months Ended June 29, 2024 (%) | | :-------------------------- | :----------------------------------- | :----------------------------------- | | Net Sales | 100% | 100% | | Gross Margin | 53% | 51% | | Research and Development | 25% | 28% | | Selling, General and Administrative | 10% | 10% | | Income from Operations | 18% | 13% | | Net Income | 15% | 11% | [Net Sales](index=18&type=section&id=Net%20Sales) This section analyzes the drivers of net sales, including product line performance and customer concentration Net Sales | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | YoY Change (%) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------- | | Total Net Sales | $407.3 | $374.0 | 9% | | Audio Products Sales | $240.0 | $218.9 | 9.6% | | HPMS Products Sales | $167.2 | $155.0 | 7.9% | - Net sales increased due to latest-generation products and higher smartphone unit volumes[88](index=88&type=chunk) - Apple Inc. represented approximately **86%** of the Company's total net sales for the first quarter of fiscal year 2026[91](index=91&type=chunk) [Gross Margin](index=18&type=section&id=Gross%20Margin) This section discusses factors influencing the company's gross profit margin, such as product mix and pricing Gross Margin | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Gross Margin | 52.6% | 50.5% | - Gross margin improved primarily due to a more favorable product mix[92](index=92&type=chunk) [Research and Development Expense](index=18&type=section&id=Research%20and%20Development%20Expense) This section analyzes changes in R&D spending and their impact on product innovation Research and Development Expense | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | R&D Expense | $102.9 | $105.4 | - R&D expense decreased due to reduced stock-based compensation and product development costs, partially offset by increased employee-related costs[93](index=93&type=chunk) [Selling, General and Administrative Expense](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expense) This section discusses trends in SG&A expenses, including employee-related costs and other administrative overhead Selling, General and Administrative Expense | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | SG&A Expense | $38.7 | $36.8 | - SG&A expense increased primarily due to higher stock-based compensation and employee-related expenses, offset by the absence of prior year lease impairment costs[94](index=94&type=chunk) [Interest Income](index=19&type=section&id=Interest%20Income) This section explains the sources and changes in the company's interest income from investments Interest Income | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Interest Income | $8.8 | $8.4 | - Interest income increased due to returns generated from higher combined average cash, cash equivalents, and marketable securities balances[95](index=95&type=chunk) [Interest Expense](index=19&type=section&id=Interest%20Expense) This section details the company's interest costs, primarily related to its revolving credit facility Interest Expense | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Interest Expense | $0.2 | $0.2 | - Interest expense primarily consists of commitment fees associated with the Revolving Credit Facility[96](index=96&type=chunk) [Other Income (Expense)](index=19&type=section&id=Other%20Income%20%28Expense%29) This section covers non-operating income and expenses, including foreign currency remeasurement effects Other Income (Expense) | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Other Income (Expense) | $(0.4) | $1.6 | - This activity primarily related to non-investment income (expense) and remeasurement on foreign currency denominated monetary assets and liabilities[97](index=97&type=chunk) [Income Taxes](index=19&type=section&id=Income%20Taxes) This section analyzes the provision for income taxes, effective tax rates, and the impact of tax legislation Income Taxes Provision and Rate | Metric | Three Months Ended June 28, 2025 (in millions) | Three Months Ended June 29, 2024 (in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Provision for Income Taxes | $19.9 | $14.5 | | Effective Tax Rate | 24.7% | 25.6% | - Effective tax rates were unfavorably impacted by R&D capitalization requirements and U.S. tax rules on refundable tax credits[100](index=100&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, is expected to impact future tax provisions by permanently eliminating the U.S. R&D capitalization requirement[101](index=101&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to generate and manage cash, including sources and uses of funds - Principal liquidity sources include cash on hand, cash from operations, marketable securities, and a **$300 million** Revolving Credit Facility[102](index=102&type=chunk) - Cash generated from operating activities increased to **$116.1 million** for Q1 FY26, up from **$87.2 million** in Q1 FY25[103](index=103&type=chunk) - Net cash used in investing activities decreased significantly to **$6.2 million** in Q1 FY26 from **$66.6 million** in Q1 FY25, primarily due to lower net purchases of marketable securities and capital expenditures[104](index=104&type=chunk) - Net cash used in financing activities increased to **$100.7 million** in Q1 FY26, primarily due to higher stock repurchases[105](index=105&type=chunk) - The Company believes its expected future cash earnings and existing resources are sufficient to meet short-term and long-term capital requirements[106](index=106&type=chunk) [Revolving Credit Facility](index=20&type=section&id=Revolving%20Credit%20Facility) This section provides details on the company's credit facility, its terms, and current utilization - The Company maintains a **$300 million** senior secured revolving credit facility, maturing on July 8, 2026[107](index=107&type=chunk) - The facility's benchmark interest rate was updated to Term SOFR in March 2023[108](index=108&type=chunk) - As of June 28, 2025, there were no amounts outstanding under the facility, and the Company was in compliance with all covenants[109](index=109&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=21&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The Company is exposed to market risks related to interest rates, currency movements, and marketable securities, which it manages using derivative instruments - The Company is exposed to market risks associated with interest rates on debt securities, currency movements on non-functional currency assets and liabilities, and market factors affecting marketable securities[111](index=111&type=chunk) - Foreign currency forward contracts are used to manage exposure to foreign currency exchange risk[111](index=111&type=chunk) - No material changes to market risk disclosures were reported as of June 28, 2025, compared to the fiscal year 2025 Annual Report on Form 10-K[111](index=111&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=21&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of disclosure controls and procedures](index=21&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) This section reports on the effectiveness of the company's disclosure controls as assessed by management - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 28, 2025[113](index=113&type=chunk) [Changes in control over financial reporting](index=21&type=section&id=Changes%20in%20control%20over%20financial%20reporting) This section discloses any material changes in the company's internal control over financial reporting - No changes in the Company's internal control over financial reporting occurred during the quarter ended June 28, 2025, that materially affected or are reasonably likely to materially affect it[114](index=114&type=chunk) [PART II - OTHER INFORMATION](index=21&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity security sales, and other miscellaneous information [ITEM 1. LEGAL PROCEEDINGS](index=21&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is incorporated by reference from Note 13 to the unaudited consolidated condensed financial statements, indicating management's belief that no pending matters will have a material adverse effect - Information regarding legal proceedings is incorporated by reference from Note 13 of the financial statements[116](index=116&type=chunk) [ITEM 1A. RISK FACTORS](index=21&type=section&id=ITEM%201A.%20RISK%20FACTORS) The Company's significant dependence on a limited number of key customers, particularly Apple Inc. (86% of net sales), poses substantial risks including potential reductions in sales, pricing pressure, and customer diversification - The Company depends on a limited number of customers and distributors for a substantial portion of its sales; Apple Inc. represented approximately **86%** of net sales for the first quarter of fiscal year 2026[118](index=118&type=chunk)[119](index=119&type=chunk) - Risks include customers stopping product incorporation with limited notice, lack of minimum purchase requirements, competition, internal technology development by customers, and pricing pressure[120](index=120&type=chunk)[121](index=121&type=chunk) - No other material changes to risk factors were disclosed since the fiscal year 2025 Annual Report on Form 10-K[117](index=117&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=23&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During the quarter, the Company repurchased 1.013 million shares for $100.0 million, completing the 2022 authorization and initiating repurchases under a new $500 million authorization from March 2025, with $454.1 million remaining Share Repurchase Program Activity | Monthly Period | Total Shares Purchased (in thousands) | Average Price Paid Per Share | Approximate Dollar Value Remaining Under Plans (in thousands) | | :-------------------------- | :------------------------------------ | :--------------------------- | :------------------------------------------------------------ | | March 30, 2025 - April 26, 2025 | 297 | $84.26 | $529,108 | | April 27, 2025 - May 24, 2025 | 628 | $105.02 | $463,108 | | May 25, 2025 - June 28, 2025 | 88 | $101.73 | $454,108 | | Total | 1,013 | $98.66 | $454,108 | - The Company repurchased **1.0 million shares** for **$100.0 million** during the first quarter of fiscal year 2026, completing the previous 2022 share repurchase authorization and beginning repurchases under the 2025 authorization[124](index=124&type=chunk) - Approximately **$454.1 million** remains available for repurchase under the March 2025 authorization[124](index=124&type=chunk) - Net stock repurchases are subject to a **1% excise tax** under the Inflation Reduction Act[125](index=125&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=23&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[126](index=126&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=23&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company - Not applicable[127](index=127&type=chunk) [ITEM 5. OTHER INFORMATION](index=24&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section discloses trading arrangements, specifically a Rule 10b5-1(c) plan adopted by Denise Grode, EVP, Chief Human Resources Officer, to sell up to 4,410 securities - Denise Grode, EVP, Chief Human Resources Officer, adopted a Rule 10b5-1(c) trading arrangement on May 30, 2025, to sell up to **4,410 securities** by October 31, 2025[129](index=129&type=chunk) [ITEM 6. EXHIBITS](index=24&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of or incorporated by reference into the report, including corporate governance documents, CEO/CFO certifications, and Inline XBRL documents - Lists all exhibits filed or incorporated by reference, including the Amended and Restated Certificate of Incorporation, Bylaws, CEO/CFO certifications, and Inline XBRL documents[130](index=130&type=chunk) [Signatures](index=25&type=section&id=Signatures) The report is formally signed by Jeff Woolard, Chief Financial Officer of Cirrus Logic, Inc., on August 5, 2025, certifying its submission - The report was signed by Jeff Woolard, Chief Financial Officer of Cirrus Logic, Inc., on August 5, 2025[135](index=135&type=chunk)

Exhibit 99.2 Q1 FY26 Letter to Shareholders August 5, 2025 August 5, 2025 Dear Shareholders, | Q1 FY26 | GAAP | Adj. | Non-GAAP* | | --- | --- | --- | --- | | Revenue | $407.3 | | $407.3 | | Gross Profit | $214.0 | $0.3 | $214.3 | | Gross Margin | 52.6% | | 52.6% | | Operating Expense | $141.6 | ($22.1) | $119.5 | | Operating Income | $72.4 | $22.5 | $94.9 | | Operating Profit | 17.8% | | 23.3% | | Interest Income | $8.6 | | $8.6 | | Other Expense | $(0.4) | | $(0.4) | | Income Tax Expense | $19.9 | $2.9 | ...

Core Viewpoint - Cirrus Aircraft Ltd. is gaining renewed investor interest following a significant stock price increase, prompting its major shareholder, Aviation Industry Corp. of China (AVIC), to sell part of its stake, raising nearly HK$700 million [2][3]. Group 1: Stake Sale and Market Reaction - AVIC sold 17.5 million shares at HK$39.98 each, representing an 8% discount to the previous day's close, reducing its stake from 84.97% to 80.18% [3]. - Following the stake sale, Cirrus shares experienced a decline of up to 7.4% before stabilizing above HK$40, ultimately closing down 3% at HK$42.15 [4]. Group 2: Company Background and IPO Performance - Cirrus became a Chinese company in 2011 when AVIC acquired 70% from its founders, with products including the SR2X series and Vision Jet [5]. - The SR2X has been the world's top-selling single-engine piston aircraft for 23 consecutive years [6]. - Cirrus had a lukewarm IPO reception, with only 5.5 million of the 54.9 million shares offered sold to local investors, leading to a total raise of HK$1.39 billion [8]. Group 3: Financial Performance and Growth Potential - Cirrus' revenue has grown from $738 million in 2021 to over $1 billion in 2023, averaging 20.3% annual growth, while profits increased from $72.4 million to $91.1 million during the same period [13]. - In the last year, revenue climbed 12% year-on-year to $1.2 billion, with profits jumping 32.5% to $120 million, supported by the delivery of 731 jets [14]. - The company's backlog increased by 114 jets to 633 on order, indicating strong future demand [14]. Group 4: Market Position and Valuation - Cirrus currently trades at a price-to-earnings (P/E) ratio of around 16 times, lower than the 19 times for Textron, suggesting potential for further valuation improvement if profit growth continues [16]. - The geopolitical concerns surrounding U.S. sanctions on AVIC appear to be easing, contributing to the stock's recent gains [15].

Core Insights - Cirrus Logic Inc. (CRUS) has launched four new Pro Audio components, including two ADCs and two DACs, aimed at delivering high audio fidelity at competitive prices [1][10] - The new products are designed to meet the increasing demands of various audio applications, including HiFi playback systems and professional recording environments [1][2] Product Features - The new ADCs (CS5308S and CS5304S) and DACs (CS4308S and CS4304S) are available for sampling and can be customized using Cirrus Logic's SoundClear Studio software, enhancing user convenience [3][10] - Key features include Hybrid Gain Control for precise audio signal adjustments and Differentiated Digital Filters that allow customization of sound signatures while managing power consumption effectively [4][5] Market Strategy - The introduction of these components reflects Cirrus Logic's commitment to the prosumer audio market, making high-quality audio technology more accessible [2][10] - The company is leveraging its established intellectual property to enhance the performance of these new products, which are expected to integrate seamlessly into various audio ecosystems [6][10] Growth Potential - Cirrus Logic's growth strategy includes partnerships, such as with Compal Electronics to develop AI-powered audio technology, which aims to improve sound performance in the consumer electronics sector [7] - The company is also expanding its presence in the laptop market and has launched new amplifiers and codecs to enhance mobile audio quality, targeting a High-Performance Mixed-Signal SAM of over $5.7 billion and an Audio SAM of more than $3.3 billion by 2028 [8][9] Financial Outlook - For the fiscal first quarter, Cirrus Logic projects revenues between $330 million and $390 million, indicating a 15% sequential decline and a 4% year-over-year decrease at the midpoint [11]

Core Viewpoint - Cirrus Logic (CRUS) shares have increased by approximately 4.5% over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings report [1] Earnings Estimates - Fresh estimates for Cirrus Logic have trended upward in the past month, with the consensus estimate shifting by 44.94% [2] VGM Scores - Cirrus Logic has a Growth Score of B, a Momentum Score of B, and a Value Score of B, resulting in an aggregate VGM Score of A, indicating strong overall performance across multiple investment strategies [3] Outlook - The upward trend in estimates for Cirrus Logic appears promising, with a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [4] Industry Performance - Cirrus Logic is part of the Zacks Electronics - Semiconductors industry, where Qualcomm (QCOM) has seen a 3.3% increase over the past month, reporting revenues of $10.84 billion, a year-over-year increase of 15.4% [5] - Qualcomm's expected earnings for the current quarter are $2.69 per share, reflecting a year-over-year change of 15.5%, with a Zacks Rank of 3 (Hold) and a VGM Score of B [6]