Cirrus Logic(CRUS) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Cirrus Logic reported record revenue of $465.9 million for Q2 FY2022, representing a 34% year-over-year increase, marking the highest revenue for the September quarter [8][9] - The company achieved year-over-year operating profit growth alongside record earnings per share [8] Business Line Data and Key Metrics Changes - The high-performance mixed-signal products segment contributed 30% of total revenue in the first half of FY2022, up 117% from the previous year [9] - The attach rate of camera controllers in smartphones has increased, contributing positively to revenue growth in the high-performance mixed-signal category [31] Market Data and Key Metrics Changes - The company is experiencing strong design momentum and diverse relationships across Android and other markets outside of smartphones, although supply constraints remain a challenge [35][36] - The company estimates a $400 million serviceable available market (SAM) in the notebook segment over the next five years, driven by strategic transitions in audio and video technology [19] Company Strategy and Development Direction - Cirrus Logic is focused on diversifying beyond audio, with significant milestones achieved in high-performance mixed-signal products, including new power conversion and control ICs [9] - The integration of Lion Semiconductor is expected to enhance the company's roadmap and expand its market reach, particularly in power products [12][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by supply chain disruptions but expressed confidence in long-term planning and customer relationships to navigate these issues [39][61] - The company aims to maintain a gross margin target of 50%, although it may dip slightly below this target in FY2023 due to pricing pressures and cost increases [60][82] Other Important Information - The company announced the retirement of CFO Thurman Case, who will assist in the transition to a new CFO [6][7] - Cirrus Logic has welcomed Raquib Hussein to its Board of Directors, enhancing its expertise in the semiconductor industry [8] Q&A Session Summary Question: Integration efforts with Lion Semiconductor - Management emphasized the priority of helping the Lion team execute on existing opportunities while exploring synergies with Cirrus Logic's technology [13][15] Question: Opportunities in the notebook market - Management indicated a $400 million SAM in the notebook segment, highlighting both opportunistic and strategic growth factors [19][18] Question: GlobalFoundries payment and capacity - The $255 million payment includes capacity reservation and wafer supply commitments, with expectations for increased capacity through 2026 [22][24] Question: Camera controller attach rates - Management noted a growing attach rate for camera controllers, with expectations for continued innovation and product updates [28][31] Question: Revenue outside the largest customer - Management reported a $50 million increase in revenue outside the largest customer, driven by design momentum and new wins [33][35] Question: Gross margin expectations - Management reiterated a target of 50% gross margin, with potential for slight dips due to market conditions [60][82] Question: Cash balance and financing needs - The company is comfortable operating with a cash balance above $200 million and does not foresee immediate financing needs [73][74] Question: Haptics opportunities - Management acknowledged modest expectations for haptics but is actively engaged with customers in AR and VR markets [76][78]