Executive Summary Cirrus Logic exceeded Q3 FY25 revenue guidance, driven by strong smartphone demand and new market momentum Q3 FY25 Highlights Cirrus Logic reported Q3 FY25 revenue of $555.7 million, exceeding guidance, driven by strong smartphone product demand Q3 FY25 Key Financial Metrics | Metric | GAAP | Non-GAAP | | :---------------- | :----- | :------- | | Revenue | $555.7M | $555.7M | | Gross Profit | $297.8M | $298.1M | | Gross Margin | 53.6% | 53.6% | | Operating Income | $145.8M | $168.9M | | Operating Profit | 26.2% | 30.4% | | Net Income | $116.0M | $138.3M | | Diluted EPS | $2.11 | $2.51 | - Q3 FY25 revenue of $555.7 million was significantly above the top end of guidance, primarily due to stronger-than-expected demand for smartphone products24 - The company gained momentum in the laptop business, aligning with previous expectations, and began sampling timing products for automotive and professional audio applications2 Financial Performance Q3 FY25 saw revenue growth from smartphones, improved gross margins, and increased operating expenses Revenue Analysis Q3 FY25 revenue reached $555.7 million, marking a 3% sequential increase driven by higher smartphone unit volumes, but a 10% year-over-year decrease partly due to fiscal quarter timing and lower smartphone unit volumes Revenue Breakdown by Quarter and Product Line | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | Sequential Change | YoY Change | | :---------------- | :------ | :------ | :------ | :---------------- | :--------- | | Revenue | $555.7M | $541.8M | $618.9M | +3% | -10% | | Audio Revenue | $346.3M | $316.6M | $378.6M | +9.4% | -8.5% | | HPMS Revenue | $209.5M | $225.3M | $240.4M | -7.1% | -12.9% | - The sequential increase in revenue was driven by higher smartphone unit volumes, while the year-over-year decrease was primarily due to lower smartphone unit volumes and fiscal quarter timing, partially offset by increased revenue from latest-generation products4 - Audio and High-Performance Mixed-Signal (HPMS) product lines contributed 62% and 38% of total revenue, respectively, in Q3 FY25. One customer accounted for approximately 91% of total revenue6 Gross Margin GAAP gross margin improved to 53.6% in Q3 FY25, up from 52.2% sequentially and 51.3% year-over-year Gross Margin Trends | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | Sequential Change (bps) | YoY Change (bps) | | :---------------- | :------ | :------ | :------ | :---------------------- | :--------------- | | GAAP Gross Margin | 53.6% | 52.2% | 51.3% | +140 | +230 | | Non-GAAP Gross Margin | 53.6% | 52.2% | 51.4% | +140 | +220 | - The sequential and year-over-year increases in gross margin were largely due to a shift in product mix toward higher-margin products, with lower supply chain costs also contributing sequentially7 Operating Expenses and Profit Q3 FY25 GAAP operating profit was 26.2% and non-GAAP was 30.4%, with GAAP operating expense increasing sequentially to $152.0 million Operating Performance Metrics | Metric | Q3 FY25 (GAAP) | Q3 FY25 (Non-GAAP) | | :---------------- | :------------- | :----------------- | | Operating Profit | 26.2% | 30.4% | | Operating Expense | $152.0M | $129.2M | - GAAP operating expense increased sequentially by $1.3 million, primarily due to higher employee-related expenses, offset by lower stock-based compensation and product development costs9 - Total headcount at the end of Q3 FY25 was 1,6679 Tax and Earnings Per Share (EPS) GAAP diluted EPS for Q3 FY25 was $2.11, and non-GAAP diluted EPS was $2.51, both tax rates unfavorably impacted by R&D capitalization EPS and Effective Tax Rates | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | | :----------------------- | :------ | :------ | :------ | | GAAP Diluted EPS | $2.11 | $1.83 | $2.50 | | Non-GAAP Diluted EPS | $2.51 | $2.25 | $2.89 | | GAAP Effective Tax Rate | 24.5% | 27.0% | 19.4% | | Non-GAAP Effective Tax Rate | 21.8% | 23.8% | 18.4% | - Both GAAP and non-GAAP effective tax rates were unfavorably impacted by the requirement to capitalize and amortize R&D expenses, a provision of the Tax Cuts and Jobs Act of 201712 - The company anticipates the impact of capitalized R&D will become less pronounced as additional years of R&D expenses are amortized13 Financial Position and Cash Flow Strong financial position with increased cash, investments, and substantial cash flow from operations Balance Sheet Overview Cirrus Logic's cash and investment balance increased to $816.6 million at the end of Q3 FY25, with inventory expected to peak in the first half of FY26 Key Balance Sheet Items | Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | | :------------------------ | :------ | :------ | :------ | | Cash and Investment Balance | $816.6M | $706.6M | $587.0M | | Inventory | $275.6M | $271.8M | $256.7M | - The company expects inventory to peak during the first half of FY26 as it continues to fulfill demand and manage wafer purchase commitments15 Cash Flow and Capital Allocation Cash flow from operations for Q3 FY25 was $218.6 million, with $70.0 million returned to shareholders through share repurchases Cash Flow and Share Repurchase Summary | Metric | Q3 FY25 | | :-------------------------------- | :------ | | Cash Flow from Operations | $218.6M | | Shares Repurchased | 678,768 | | Average Repurchase Price | $103.18 | | Cash Returned via Buybacks | $70.0M | | Remaining Repurchase Authorization | $154.1M | - Cirrus Logic anticipates strong cash flow generation over the long term and will continue to evaluate uses including organic growth, M&A, and returning capital to shareholders14 Business Strategy and Product Development Strategy focuses on smartphone leadership, HPMS expansion, and diversification into new markets Company Growth Strategy Cirrus Logic's growth strategy is three-pronged: maintaining leadership in smartphone audio, increasing HPMS content in smartphones, and expanding into new applications and markets - The company's strategy focuses on maintaining leadership in smartphone audio, increasing HPMS content in smartphones, and expanding into additional applications and markets with existing and new components16 Smartphone Business The company is experiencing success with its latest-generation custom boosted amplifier and first 22-nanometer smart codec in smartphones, expanding its HPMS presence - Latest-generation custom boosted amplifier and first 22-nanometer smart codec are shipping in recent smartphones, offering significant power and efficiency improvements and system design flexibility17 - The company is expanding its HPMS presence in smartphones, benefiting from a favorable mix of devices including its camera controllers and actively pursuing opportunities in high-efficiency charging, battery management, and system-side power delivery1819 - A leading Android OEM introduced a flagship smartphone featuring two Cirrus Logic boosted amplifiers and a haptic driver, receiving positive reviews17 New Applications and Markets Cirrus Logic is actively expanding beyond smartphones, with immediate opportunities in laptops and longer-term targets in professional audio, automotive, and industrial markets - The company is focused on leveraging its IP in laptops, shipping content to the top five laptop OEMs, with products included in Intel's Lunar Lake and Arrow Lake processor reference designs20 - Market trends fueling demand for laptop products include thinner/lighter devices, MIPI SoundWire® adoption, and AI-enabled devices20 - New products are being introduced for professional audio, automotive, and industrial end markets, including timing products designed for superior audio experiences and high-performance audio data converters21 Summary and Guidance Q4 FY25 guidance anticipates sequential revenue decrease, year-over-year increase, and stable gross margins Q4 FY25 Outlook For Q4 FY25 (March quarter), Cirrus Logic expects revenue between $350 million and $410 million, GAAP gross margin between 51% and 53%, and combined GAAP R&D and SG&A expenses between $141 million and $147 million Q4 FY25 Financial Guidance | Metric | Q4 FY25 Guidance | | :-------------------------------- | :---------------- | | Revenue | $350M - $410M | | GAAP Gross Margin | 51% - 53% | | Combined GAAP R&D and SG&A Expenses | $141M - $147M | | Non-GAAP Operating Expenses | $119M - $125M | - At the midpoint, Q4 FY25 revenue is expected to be down 32% sequentially but up 2% year over year5 Use of Non-GAAP Financial Information Non-GAAP financial measures supplement GAAP results, offering insights for management and investors Non-GAAP Disclosure Cirrus Logic provides non-GAAP financial information to supplement GAAP results, used internally for evaluation and believed useful for investors - Non-GAAP financial information is provided to supplement GAAP results and is used internally by management to evaluate and manage the company2728 - The company is unable to provide GAAP effective tax rate guidance or reconciliation without unreasonable efforts due to future stock price and stock-based compensation information not being available27 Safe Harbor Statement Forward-looking statements are subject to risks and uncertainties that could impact future results Forward-Looking Statements and Risks The report contains forward-looking statements regarding future business growth, cash flow, inventory, market expansion, and financial forecasts, subject to various risks and uncertainties - Forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially2930 - Key risks include the level and timing of orders and shipments, customer cancellations, and changes in future smartphone unit volumes30 Consolidated Financial Statements Detailed GAAP financial statements include operations, balance sheets, and cash flows Consolidated Condensed Statement of Operations The Consolidated Condensed Statement of Operations provides detailed GAAP financial results for Q3 FY25, Q2 FY25, and Q3 FY24, as well as the nine months ended December 28, 2024, and December 30, 2023 Consolidated Condensed Statement of Operations (GAAP) | Metric (in thousands) | Q3'25 (Dec. 28, 2024) | Q2'25 (Sep. 28, 2024) | Q3'24 (Dec. 30, 2023) | | :---------------------- | :-------------------- | :-------------------- | :-------------------- | | Net sales | $555,738 | $541,857 | $618,984 | | Cost of sales | $257,951 | $259,267 | $301,520 | | Gross profit | $297,787 | $282,590 | $317,464 | | Income from operations | $145,769 | $131,852 | $167,548 | | Net income | $116,005 | $102,140 | $138,723 | | Diluted earnings per share | $2.11 | $1.83 | $2.50 | Consolidated Condensed Balance Sheet The Consolidated Condensed Balance Sheet presents the company's financial position as of December 28, 2024, March 30, 2024, and December 30, 2023 Consolidated Condensed Balance Sheet (GAAP) | Metric (in thousands) | Dec. 28, 2024 | Mar. 30, 2024 | Dec. 30, 2023 | | :-------------------------- | :------------ | :------------ | :------------ | | Total current Assets | $1,250,450 | $1,106,192 | $1,185,385 | | Total assets | $2,363,240 | $2,231,576 | $2,217,113 | | Total current liabilities | $210,913 | $186,393 | $178,594 | | Total long-term liabilities | $189,529 | $228,169 | $237,759 | | Total stockholders' equity | $1,962,798 | $1,817,014 | $1,800,760 | Consolidated Condensed Statement of Cash Flows The Consolidated Condensed Statement of Cash Flows outlines the cash inflows and outflows from operating, investing, and financing activities for Q3 FY25 and Q3 FY24 Consolidated Condensed Statement of Cash Flows (GAAP) | Metric (in thousands) | Q3'25 (Dec. 28, 2024) | Q3'24 (Dec. 30, 2023) | | :------------------------------------ | :-------------------- | :-------------------- | | Net cash provided by operating activities | $218,588 | $313,692 | | Net cash used in investing activities | $(39,132) | $(36,971) | | Net cash used in financing activities | $(98,771) | $(70,595) | | Net increase in cash and cash equivalents | $80,685 | $206,126 | | Cash and cash equivalents at end of period | $526,444 | $483,931 | GAAP to Non-GAAP Reconciliations This section provides detailed reconciliations between GAAP and non-GAAP financial measures for various metrics, highlighting adjustments for items like stock-based compensation and acquisition intangibles GAAP to Non-GAAP Reconciliation Summary | Metric (in thousands) | Q3'25 GAAP | Q3'25 Non-GAAP | | :------------------------------------ | :--------- | :------------- | | Net Income | $116,005 | $138,309 | | Diluted EPS | $2.11 | $2.51 | | Operating Income | $145,769 | $168,900 | | Operating Expenses | $152,018 | $129,238 | | Gross Profit | $297,787 | $298,138 | | Effective Tax Rate | 24.5% | 21.8% | | Free Cash Flow | N/A | $211,901 | - Adjustments for non-GAAP measures primarily include amortization of acquisition intangibles, stock-based compensation expense, lease impairment, restructuring costs, and acquisition-related costs37 - Free cash flow is calculated as GAAP cash flow from operations less capital expenditures47
Cirrus Logic(CRUS) - 2025 Q3 - Quarterly Results