Financial Data and Key Metrics Changes - Cirrus Logic reported record revenue of $561 million for the September quarter, which was at the top end of guidance, driven by demand for smartphone components [4][15] - Revenue increased by 38% sequentially due to higher smartphone unit volumes and was up 4% year-over-year [15] - Non-GAAP gross profit was $294.7 million with a gross margin of 52.5%, reflecting a favorable product mix [15][17] - Non-GAAP operating income was $167 million, representing 29.8% of revenue [16] - Non-GAAP net income for the quarter was $150 million, resulting in earnings per share of $2.83 [17] - The company ended the quarter with $896 million in cash and investments, up $48.3 million from the prior quarter [17] Business Line Data and Key Metrics Changes - Strong demand was noted for the latest generation custom-boosted amplifier and 22-nanometer smart codec in the smartphone audio business [5][6] - Engagement in the PC market is increasing, with strong design activity and expectations for new consumer and commercial laptops featuring Cirrus Logic components [9][10] - The company is diversifying revenue streams with high-performance mixed-signal solutions, particularly in camera controllers and battery performance technologies [8][9][12] Market Data and Key Metrics Changes - The company is experiencing growth in the PC market, with significant design wins in both commercial and consumer segments [10][35] - Interest in general market products across professional audio, automotive, industrial, and imaging end markets is strong, with long product life cycles and higher gross margins [12][13] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed-signal solutions, and leveraging expertise in new markets [4][5] - The company aims to penetrate the PC market further, particularly with voice-related features that enhance AI capabilities [10][41] - Continued investment in battery management technologies is seen as a crucial area for future growth [26] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in seasonality due to increased camera content, which is expected to impact revenue patterns moving forward [23] - The company remains optimistic about growth opportunities in the PC market and is focused on executing its long-term strategy [12][45] Other Important Information - The company has no debt outstanding and reported a decrease in inventory to $236.4 million, with approximately 81 days of inventory [17][18] - Cirrus Logic plans to participate in the Barclays Global Technology Conference on December 11 [46] Q&A Session Summary Question: Thoughts on seasonality going forward - Management indicated that the seasonality shape has changed, primarily due to camera content becoming a larger revenue portion, with expectations for traditional patterns to resume [23][24] Question: Updates on power/battery opportunities in smartphones - Management expressed excitement about battery management technologies and the potential for compelling IP in this area, although no specific design wins were disclosed [26][27] Question: OpEx expectations for the third quarter - Management confirmed that lower OpEx in Q2 was due to timing issues, with some expenses pushed into Q3, maintaining a disciplined approach to spending [31][32] Question: Revenue trends outside the largest customer - Management acknowledged softness in the Android space but highlighted growth in the PC market as a significant opportunity moving forward [34][35] Question: Changes to smartphone unit outlook - Management maintained that there were no material changes to the smartphone unit outlook, with seasonality expected to follow historical patterns [39] Question: New products for AI PCs and revenue expectations - Management noted significant interest in voice-related features for AI PCs, with expectations for these products to contribute to revenue in the future [40][42]

Financial Data and Key Metrics Changes - Cirrus Logic reported record revenue of $561 million for the September quarter, which was at the top end of guidance, driven by demand for smartphone components [4][15] - Revenue increased by 38% sequentially due to higher smartphone unit volumes and was up 4% year-over-year [15] - Non-GAAP gross profit was $294.7 million with a gross margin of 52.5%, reflecting a favorable product mix [15][17] - Non-GAAP operating income was $167 million, representing 29.8% of revenue [16] - Non-GAAP net income for the quarter was $150 million, resulting in earnings per share of $2.83 [17] - The company ended the quarter with $896 million in cash and investments, up $48.3 million from the prior quarter [17] Business Line Data and Key Metrics Changes - Strong demand was noted for the latest generation custom-boosted amplifier and 22-nanometer smart codec in the smartphone audio business [5][6] - Engagement in the PC market is increasing, with strong design activity and expectations for new consumer and commercial laptops featuring Cirrus Logic components [9][10] - The company is diversifying revenue streams with high-performance mixed-signal solutions, particularly in camera controllers and battery performance technologies [8][9][12] Market Data and Key Metrics Changes - The company is experiencing growth in the PC market, with significant design wins in both commercial and consumer segments [10][35] - There is a noted softness in the Android space, impacting revenue from non-flagship customers [34] - The general market products are gaining traction across professional audio, automotive, industrial, and imaging end markets [12] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed-signal solutions, and leveraging expertise in new markets [4][5] - The company aims to penetrate the PC market further, particularly with voice-related features for AI-enabled devices [10][42] - Continued investment in battery management technologies is seen as a crucial area for future growth [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the traction in the PC market and the potential for growth in new applications [12][35] - The company anticipates a slight decrease in inventory in the upcoming quarter and maintains a disciplined approach to operating expenses [18][19] - Management noted that seasonality in the business is shifting, primarily due to increased camera content in revenue [23] Other Important Information - The company has no debt outstanding and reported a decrease in inventory levels, ending the quarter with approximately 81 days of inventory [17][18] - Cirrus Logic will participate in the Barclays Global Technology Conference on December 11 [46] Q&A Session Summary Question: Thoughts on seasonality going forward - Management indicated that the seasonality shape of the business has changed, with camera content becoming a larger portion of total revenue, pushing some revenue earlier in the fiscal year [22][23] Question: Updates on power/battery opportunities in smartphones - Management confirmed ongoing investment in battery management technologies and expressed excitement about the potential IP in this area [25][26] Question: Clarification on OPEX and its impact on future quarters - Management noted that lower OPEX in Q2 was due to timing issues and that some expenses would carry over into Q3 [31][32] Question: Revenue trends outside of the largest customer - Management acknowledged softness in the Android space but highlighted growth potential in the PC market as a key area of focus [34][35] Question: Changes to smartphone unit outlook - Management maintained that there were no material changes to the smartphone unit outlook despite strong quarterly results [38][39] Question: Development of new products for AI PCs - Management noted significant interest in voice-related features for AI and indicated that this would expand the serviceable addressable market (SAM) for the company [40][42]

Financial Data and Key Metrics Changes - Cirrus Logic reported record revenue of $561 million for the September quarter, which was at the top end of guidance, driven by demand for smartphone components [4][15] - Revenue increased by 38% sequentially due to higher smartphone unit volumes and was up 4% year-over-year [15] - Non-GAAP gross profit was $294.7 million with a gross margin of 52.5%, reflecting a favorable product mix [15][17] - Non-GAAP operating income was $167 million, representing 29.8% of revenue [16] - Non-GAAP net income for the quarter was $150 million, resulting in earnings per share of $2.83 [17] - The company ended the quarter with $896 million in cash and investments, up $48.3 million from the prior quarter [17] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw strong demand for the latest generation custom-boosted amplifier and smart codec, contributing significantly to revenue [5][6] - Engagement in the PC market is increasing, with strong design activity and expectations for new consumer and commercial laptops featuring Cirrus Logic components [10][12] - The company is diversifying revenue streams with high-performance mixed-signal solutions, particularly in camera controllers and battery performance technologies [9][10] Market Data and Key Metrics Changes - The company noted strong interest in general market products across professional audio, automotive, industrial, and imaging end markets, which typically have long life cycles and higher gross margins [12] - The Android ecosystem remains a valuable contributor, although there was some softness in the Android space impacting revenue [36] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed-signal solutions, and leveraging expertise in new markets [4][5] - The company aims to penetrate the PC market further, particularly in mainstream consumer laptops, to capture a larger share of the addressable market [10][36] - There is a strong emphasis on developing voice-related features for AI-enabled PCs, which is expected to enhance product offerings and market reach [42][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the traction in the PC market and the potential for growth in battery management technologies for smartphones [10][27] - The company does not foresee significant changes in seasonality for the remainder of the fiscal year, maintaining historical patterns [24][39] - Management highlighted the importance of disciplined operating expenses and the potential for future increases if high-confidence opportunities arise [33] Other Important Information - The company has no outstanding debt and reported a decrease in inventory to $236.4 million, with approximately 81 days of inventory at the end of the quarter [17][18] - Cirrus Logic plans to participate in the Barclays Global Technology Conference on December 11 [46] Q&A Session Summary Question: Thoughts on seasonality going forward - Management noted a change in the seasonality shape due to increased camera content, which has shifted revenue patterns earlier in the fiscal year [24] Question: Updates on power/battery opportunities in smartphones - Management confirmed ongoing investment in battery management technologies and expressed excitement about the potential impact on power efficiency and battery health [27] Question: Clarification on OPEX and its impact on future quarters - Management indicated that lower OPEX in Q2 was primarily due to timing issues and that some expenses would carry into Q3 [31][33] Question: Revenue trends outside of the largest customer - Management acknowledged softness in the Android space but highlighted strong growth potential in the PC market, particularly with recent design wins in mainstream laptops [36] Question: Changes to smartphone unit outlook - Management maintained that there were no material changes to the smartphone unit outlook, consistent with previous assessments [39] Question: New products for AI PCs and revenue expectations - Management noted significant interest in voice-related features for AI PCs and indicated that initial sampling of new products is underway, with revenue expected to materialize over time [43][44]

Company Overview - Cirrus Logic was founded in 1984 and is listed on NASDAQ: CRUS[5] - The company's FY25 revenue was $1.90 billion[5] - Cirrus Logic has approximately 1,664 employees worldwide[5] Growth Strategy - The company's three-pronged strategy includes maintaining its leadership in smartphone audio, increasing HPMS (High-Performance Mixed-Signal) content in smartphones, and leveraging its strengths to expand 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 by 2029, compared to $6.8 billion in 2025[24] - The company aims to capture more PC SAM, which is estimated to be ~$1.2 billion in 2029, by increasing value per device and expanding its footprint across different laptop segments[37, 38] Financial Performance - The company's Q2 FY26 revenue was $561.0 million with a gross margin of 52.5% and combined R&D/SG&A expenses of $149.6 million[48] - The guidance for Q3 FY26 projects revenue between $500 million and $560 million, a gross margin between 51% and 53%, and combined R&D/SG&A expenses between $151 million and $157 million[48] - At the end of Q2 FY26, total cash and investments were $896 million, up from $848 million in the previous quarter[58] - In Q2 FY26, the company repurchased approximately 362,000 shares for $40 million at an average price of $110.55[58]

Financial Performance - Net sales for Q2 FY2026 increased by $19.1 million, or 4%, to $561.0 million compared to $541.9 million in Q2 FY2025[90] - Net sales for the first six months of FY2026 increased by $52.3 million, or 6%, to $968.2 million from $915.9 million in the first six months of FY2025[91] - Gross margin for Q2 FY2026 was 52.5%, up from 52.2% in Q2 FY2025, attributed to a more favorable product mix[96] - Net income for Q2 FY2026 was 23% of net sales, compared to 19% in Q2 FY2025[89] Expenses - Research and development expense for Q2 FY2026 was $110.0 million, a decrease of $2.9 million from $112.9 million in Q2 FY2025[98] - Selling, general and administrative expense for Q2 FY2026 was $39.6 million, an increase of $1.8 million from $37.8 million in Q2 FY2025[100] Cash Flow and Investments - Cash generated from operations for the first six months of fiscal year 2026 was $208.3 million, a significant increase from $95.4 million in the same period of fiscal year 2025[111] - Net cash used in investing activities decreased to $14.1 million in the first six months of fiscal year 2026, down from $72.0 million in the corresponding period of fiscal year 2025[112] - The cash used in investing activities in fiscal year 2026 included $6.9 million for net purchases of marketable securities and $7.3 million for capital expenditures and technology investments[112] Financing Activities - Net cash used in financing activities was $140.3 million in the first six months of fiscal year 2026, primarily due to stock repurchases of $140.0 million[113] - The company entered into a $300 million senior secured revolving credit facility, maturing on July 8, 2026[115] - The company updated its credit agreement to replace LIBOR with Term SOFR for interest calculations[116] Tax and Compliance - The effective tax rate for Q2 FY2026 was 14.2%, down from 27.0% in Q2 FY2025, influenced by recent tax legislation[106] - As of September 27, 2025, the company had no amounts outstanding under the Revolving Credit Facility and was in compliance with all covenants[117] Market Position and Strategy - The company’s largest customer, Apple Inc., represented approximately 90% of total net sales for Q2 FY2026[95] - The company aims to expand its market share in the PC market and develop new products with superior audio capabilities[84] Market Risks - The company is exposed to market risks associated with interest rates and currency movements, and uses forward contracts to manage foreign currency exchange risk[118] - The company experienced a $52.8 million unfavorable change in working capital during the first six months of fiscal year 2026, primarily due to increases in accounts receivables[111] Interest Income - Interest income for Q2 FY2026 was $8.9 million, compared to $8.4 million in Q2 FY2025, due to higher average cash and marketable securities balances[102]

Financial Performance - In Q2 FY26, Cirrus Logic reported record revenue of $561.0 million, a 38% increase quarter-over-quarter and a 4% increase year-over-year[4] - Q2 FY26 net sales reached $560.96 million, a 4% increase from $541.86 million in Q2 FY25[35] - Net income for Q2 FY26 was $131.60 million, representing a 29% increase from $102.14 million in Q2 FY25[35] - Basic earnings per share for Q2 FY26 were $2.57, up from $1.92 in Q2 FY25, reflecting a 34% increase[35] - GAAP Net Income for Q2 FY26 was $131,596, an increase of 29% compared to $102,140 in Q2 FY25[38] - Non-GAAP Net Income for Q2 FY26 reached $149,980, up from $125,289 in Q2 FY25, reflecting a growth of 19.8%[38] - GAAP Diluted Earnings Per Share (EPS) for Q2 FY26 was $2.48, compared to $1.83 in Q2 FY25, representing a 35.7% increase[38] - Non-GAAP Diluted EPS for Q2 FY26 was $2.83, an increase of 25.8% from $2.25 in Q2 FY25[38] Margins and Expenses - GAAP gross margin for the September quarter was 52.5%, consistent with the previous quarter and up from 52.2% in Q2 FY25[7] - Operating profit was 25.8% on a GAAP basis and 29.8% on a non-GAAP basis, with GAAP operating expenses totaling $149.6 million[8] - Gross profit for Q2 FY26 was $294.37 million, with a gross margin of 52.5%, compared to 52.2% in Q2 FY25[35] - Research and development expenses for Q2 FY26 totaled $110.02 million, slightly down from $112.93 million in Q2 FY25[35] - GAAP Operating Expenses guidance for Q3 FY26 is projected to be between $151 million and $157 million[49] - Non-GAAP Operating Expenses for Q3 FY26 are expected to be between $128 million and $134 million after adjustments[49] - Stock-based compensation expense for Q3 FY26 is estimated at $21 million, and amortization of acquisition intangibles at $2 million[49] Cash Flow and Investments - Cirrus Logic's cash and investment balance at the end of Q2 FY26 was $896.0 million, up from $847.8 million in the prior quarter[16] - Free cash flow for Q2 FY26 was $92,214, significantly higher than $8,231 in Q2 FY25, indicating a substantial improvement in cash generation[44] - Net cash provided by operating activities for the twelve months ended September 27, 2025, was $557.319 million, with Q2'26 contributing $92.214 million[47] - Free Cash Flow (Non-GAAP) for the twelve months ended September 27, 2025, was $534.171 million, with Q2'26 contributing $87.704 million[47] - Cash Flow from Operations as a percentage of revenue (GAAP) was 29% for the twelve months ended September 27, 2025, and 16% for Q2'26[47] - Free Cash Flow Margin (Non-GAAP) was 27% for the twelve months ended September 27, 2025, and 16% for Q2'26[47] - The company aims to maintain a Free Cash Flow margin above 25% in the upcoming quarters, reflecting its commitment to operational efficiency[47] Future Outlook and Strategy - The company expects revenue for the December quarter to range from $500 million to $560 million, reflecting a 6% sequential decline and approximately 5% year-over-year decline at the midpoint[4] - Cirrus Logic secured its first mainstream consumer laptop design, expected to ship in the next calendar year, as part of its strategy to grow market share in the PC market[22] - The company is developing new products for power and battery technologies, viewing this as a long-term growth driver within its HPMS product line[20] - The company expects new end products utilizing its components to launch within the next 12 months, indicating ongoing innovation[34] - The first product designed for AI-enabled PCs is expected to sample with customers during the December quarter[34] - The company plans to leverage its mixed-signal design and advanced low-power signal processing expertise to drive growth opportunities in new applications and markets[23] - The company aims to leverage its mixed-signal design expertise to expand its addressable market and product portfolio[34] - Cirrus Logic anticipates combined GAAP R&D and SG&A expenses for Q3 FY26 to range from $151 million to $157 million[11] Inventory and Tax - The company anticipates a slight sequential decrease in inventory levels[34] - The effective tax rate for the full fiscal year 2026 is projected to be non-GAAP[34]

Core Insights - Cirrus Logic, Inc. is a semiconductor company specializing in audio and voice signal processing components, serving markets such as mobile communications, automotive, and consumer electronics [1] - The company is set to release its quarterly earnings on November 4, 2025, with analysts estimating an EPS of $2.37 and projected revenue of approximately $540.5 million, while the Zacks Consensus Estimate predicts a slightly higher EPS of $2.40 [2][6] - Cirrus Logic has been upgraded to a Zacks Rank 1 (Strong Buy), indicating increased optimism about its earnings prospects and potential upward movement in stock price [3][6] - Despite a projected decline in revenue, the company is expected to report a year-over-year increase in earnings for the quarter ending September 2025, with market attention on whether it can surpass these expectations [4] - Financial metrics indicate a P/E ratio of approximately 19.39, a price-to-sales ratio of about 3.49, and a strong current ratio of 6.58, reflecting the company's financial health and conservative debt usage [5][6]

Stock Analysis - Meta Platforms (MA): Zacks ranks it a buy with A for growth and D for value, despite a 12% drop after reporting earnings, the company has a market cap of $18 trillion [2][3][4] - Vertiv (VRT): Zacks ranks it a strong buy with B for growth and F for value, with a market cap of $77 billion, benefiting from the AI trend [7] - Cirrus Logic (CRUS): Zacks ranks it a strong buy with A for growth and C for value, with a market cap of $6 billion, trading at 18 times forward earnings, earnings are coming up on November 4th [11][12] Investment Strategy - The analysis suggests a "buy the dip" opportunity for Meta Platforms [5] - Vertiv is favored due to its strong earnings growth and position in a hot sector (AI) [8][9] - Cirrus Logic is appealing due to its valuation, especially considering the current chip market dynamics [12][13] Zacks' Services - Surprise Trader: A service run by David Bartosiac that identifies stocks with the best chance of beating earnings using the Earnings ESP and Zacks Rank [14][15] - The stocks discussed (Meta, Vertiv, and Cirrus Logic) are related to the Surprise Trader service, which focuses on earnings season and identifying companies likely to beat expectations [14][16]

Core Viewpoint - Cirrus Logic (CRUS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, largely due to institutional investors adjusting their valuations based on these estimates [4]. Recent Performance and Outlook - For the fiscal year ending March 2026, Cirrus Logic is expected to earn $7.11 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 7.6% over the past three months [8]. - The upgrade to Zacks Rank 1 suggests an improvement in Cirrus Logic's underlying business, which is likely to drive the stock price higher as investors respond to this trend [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Core Viewpoint - Cirrus Logic (CRUS) has shown strong stock performance, with a 7.1% increase over the past month and a 33.4% gain since the beginning of the year, outperforming both the Zacks Computer and Technology sector and the Zacks Electronics - Semiconductors industry [1] Performance Metrics - The stock has consistently beaten earnings estimates, with the latest EPS reported at $1.51 against a consensus estimate of $1.07, and revenue exceeding estimates by 11.96% [2] - For the current fiscal year, earnings are projected at $7.11 per share with revenues of $1.82 billion, reflecting a -5.7% change in EPS and a -3.79% change in revenues [3] Valuation Metrics - Cirrus Logic has a Value Score of C, Growth Score of B, and Momentum Score of D, resulting in a VGM Score of B [6] - The stock trades at 18.7X current fiscal year EPS estimates, significantly lower than the peer industry average of 41.6X, and at 18.1X on a trailing cash flow basis compared to the peer group's average of 22.1X [7] Zacks Rank - Cirrus Logic holds a Zacks Rank of 1 (Strong Buy) due to rising earnings estimates, indicating potential for further gains [8]