Cirrus Logic(CRUS) - 2026 Q2 - Quarterly Report

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]