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]

Core Insights - The Cirrus Vision Jet is the world's first single-engine personal jet, achieving 700 deliveries and setting a best-selling record for seven consecutive years, marking its impact on personal and business aviation [1][2] Group 1: Product Overview - The Vision Jet has redefined personal aviation and jet ownership, appealing to charter operators, business owners, and entrepreneurs by offering dedicated ownership support and cost efficiency [2] - The jet's modern, fuel-efficient design contributes to lower insurance premiums and predictable operating costs, enhancing its appeal for personal and business travel [4] Group 2: Operational Efficiency - The Vision Jet significantly reduces travel time, taking approximately 3 hours to fly from Denver to Las Vegas compared to an 8-hour drive, showcasing its efficiency [4] - Cirrus provides a global Authorized Network of Service and Flight Training Centers to support Vision Jet owners, ensuring operational reliability [3] Group 3: Training and Support - Cirrus has committed to enhancing flight training for Vision Jet owners by adding a simulator in Scottsdale, capable of accommodating 45 pilots per month [5] - The Jetstream program simplifies jet management by consolidating maintenance, training, and other costs into a predictable package, reducing ownership stress [6] Group 4: Technology and Connectivity - Cirrus IQ PRO is a premium subscription plan that offers real-time insights into aircraft status, maintenance management, and flight data, streamlining aircraft management for owners [7] - A mobile unit service has been established in several states to assist owners in remote areas, enhancing customer support [8] Group 5: Company Background - Cirrus is a leader in personal aviation, known for its innovative safety features like the Cirrus Airframe Parachute System (CAPS), which has contributed to 280 safe returns [9] - The company operates seven locations across the United States, reinforcing its commitment to customer service and support [9]

Core Viewpoint - Cirrus Aircraft Ltd. is expanding its recurrent Vision Jet flight training capabilities at Cirrus Scottsdale, enhancing pilot training through a new simulator [1] Group 1: Company Developments - The new flight training simulator, constructed by CAE, replicates the flight deck environment for effective pilot training on procedures, maneuvers, and emergencies [1] - Cirrus Scottsdale will utilize the simulator for recurrent Vision Jet training, accommodating up to 45 pilots per month [1]

Industry Overview - The semiconductor industry is projected to reach $1.0 trillion in annual revenue by 2030, with an additional $300 billion potentially driven by generative AI computing needs [2][4] - Major industry players are increasing investments and innovation to support rising demand for advanced chips, particularly for AI applications [4] Company Summaries Cirrus Logic Inc. (CRUS) - Cirrus Logic designs and sells low-power, high-precision mixed-signal processing solutions, specializing in audio products and high-performance mixed-signal products for various applications [8] - The company has a Value Grade of C, with a shareholder yield of 3.2% and a price-to-earnings ratio of 19.6, ranking in the 36th percentile [9][10] - Cirrus Logic has a Momentum Grade of C, with a weighted four-quarter relative price strength of -0.6% [11][12] - The company boasts a strong Growth Grade of A, with a five-year annualized sales growth rate of 8.2% and positive cash from operations for the past five years [13] Penguin Solutions Inc. (PENG) - Penguin Solutions develops enterprise solutions across advanced computing, integrated memory, and optimized LED segments, focusing on high-performance computing and AI [14] - The company has a Quality Grade of C, with a Z-Score of 6.94 indicating low bankruptcy risk, but a return on invested capital of 8.6% ranks in the lowest 37th percentile [15][16] - Penguin Solutions has a Value Grade of B, with a price-to-sales ratio of 1.03 and an enterprise-value-to-EBITDA ratio of 9.6, ranking in the cheapest 32nd and 33rd percentiles respectively [17] - The company has a strong Momentum Grade of B, with a weighted four-quarter relative price strength of 6.0% [18] Photronics Inc. (PLAB) - Photronics manufactures and sells photomask products used in integrated circuits and flat panel displays, serving semiconductor and electronics manufacturers [19] - The company has a very strong Quality Grade of A, with a return on assets of 6.4% and a buyback yield of 6.3%, ranking in the 78th and 94th percentiles respectively [20][21] - Photronics also holds a Growth Grade of A, with a five-year annualized sales growth rate of 9.5% and positive cash from operations for the past five years [21] - The company has an Earnings Estimate Revisions Grade of B, with a positive earnings surprise of 32.5% reported for fiscal third-quarter 2025 [22][23]

Core Points - Cirrus Logic has won the Digital Technology Award at the 2025 Made in Scotland Awards, recognizing its contributions to high-performance audio and mixed-signal semiconductor solutions [1] - The Made in Scotland Awards celebrate innovation, creativity, and business success across various industries [1] - The Digital Technology Award specifically honors organizations that are making a positive change and measurable impact through their technology [1]