Cirrus Logic(CRUS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Cirrus Logic reported Q4 revenue of $424.5 million, exceeding guidance, and full fiscal year 2025 revenue of $1.9 billion, up 6% year over year driven by new products and higher smartphone volumes [7][17] - Non-GAAP gross profit for Q4 was $227.1 million with a gross margin of 53.5%, while for the full year, non-GAAP gross profit was $997.4 million with a gross margin of 52.6% [17][18] - Non-GAAP net income for Q4 was $90.6 million, or $1.67 per share, and for the full year, it was $416.6 million, resulting in record earnings per share of $7.54, up from $6.59 in the previous year [20][21] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw the introduction of new generation products, including a boosted amplifier and a smart codec, which are expected to contribute to revenue in the coming years [10][11] - The camera controller product line experienced increased unit shipments, indicating growth in this segment [11][13] - Investments in high-performance mixed signal areas are expected to enhance customer products and contribute to future profitability [12][14] Market Data and Key Metrics Changes - The company noted a strong performance in the smartphone market, with higher unit volumes contributing to revenue growth [7][17] - The laptop market is anticipated to double revenue in fiscal year 2026, with significant design wins and increased engagement with PC OEMs [34][36] - The automotive market is viewed as a long-term opportunity, with potential for significant revenue growth in the coming years [43] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed signal functionality, and leveraging expertise to enter new markets [9] - The company is actively investing in geographic diversification of its supply chain to mitigate potential trade-related challenges [8] - Continued investment in R&D is aimed at product diversification and expanding revenue opportunities [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment and potential impacts of tariffs, indicating close monitoring of developments [8][24] - The outlook for Q1 fiscal year 2026 anticipates revenue between $330 million and $390 million, reflecting a sequential decline but a slight year-over-year decrease [25][26] - Management emphasized the importance of ongoing investments in key areas to drive shareholder value [26] Other Important Information - The company returned $261 million to shareholders through share repurchases during the fiscal year, marking a record for Cirrus Logic [7][23] - The balance sheet remains strong with nearly $835 million in cash and investments, and no debt outstanding [21] Q&A Session Summary Question: What percentage of revenue did the largest customer represent for fiscal year 2025? - The largest customer represented 89% of revenue for the full year, with limited pull forwards observed in Q4 due to anticipated tariffs [30][31] Question: What is the progress in the PC-related traction? - The company achieved low tens of millions in revenue from the laptop space in fiscal year 2025 and expects to double that in fiscal year 2026 [34][36] Question: Is HPMS expected to surpass audio? - Management believes this will happen over time but has not set a specific timeframe, emphasizing growth opportunities in both areas [39][40] Question: What is the potential for the automotive market? - The automotive market is seen as a significant long-term opportunity, potentially representing $1 billion in additional serviceable available market [43] Question: What is the outlook for camera controller content? - There is considerable opportunity for growth in camera controllers, with ongoing development and increased processing capabilities expected to drive future value [48] Question: What are the ambitions for general market products? - The company aims to leverage its IP to grow the general market business, which could potentially represent 10% of revenues in the long run [60][62]