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 generation 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 two new generation products, a boosted amplifier and a smart codec, which are expected to contribute to revenue in the coming years [11][12] - The camera controller product line experienced increased unit shipments, indicating success in this area [12][14] - Investments in high-performance mixed signal areas are expected to enhance customer products, with a focus on advanced battery technologies [12][13] Market Data and Key Metrics Changes - The company reported a customer concentration figure of 89% for its largest customer in fiscal year 2025 [30] - In the laptop market, Cirrus Logic expects to double its revenue from fiscal year 2025, with significant growth in design activity and SKU shipments anticipated [34][35] - The automotive market is viewed as a long-term opportunity, with potential for significant revenue growth, although the timeline for substantial revenue impact remains uncertain [42][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 grow in new markets [10] - The company aims to diversify its product portfolio and expand its addressable market, with ongoing investments in R&D for new applications [15][26] - The strategy includes geographic diversification of the supply chain to mitigate potential trade-related challenges [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic macroeconomic environment and potential impacts of tariffs, emphasizing careful monitoring and proactive supply chain management [9][25] - The outlook for Q1 fiscal year 2026 anticipates revenue between $330 million and $390 million, reflecting a 15% sequential decline and a 4% year-over-year decrease at the midpoint [25][26] - Management expressed confidence in the company's ability to continue delivering solid financial results while executing on strategic initiatives [26][65] Other Important Information - Cirrus Logic returned $261 million to shareholders through share repurchases in fiscal year 2025, with an additional $500 million authorized for future buybacks [8][24] - The company ended fiscal year 2025 with nearly $835 million in cash and investments, maintaining a strong balance sheet with no debt [21][22] 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 fiscal year 2025, 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 market in fiscal year 2025 and expects to double that in fiscal year 2026, with significant design activity growth [34][35] Question: Is there an expectation for HPMS to surpass audio? - Management sees this happening over time but has not set a specific timeframe, emphasizing the growth opportunities in HPMS [38][39] Question: What is the potential for the automotive market? - The automotive market presents a long-term opportunity, potentially adding nearly $1 billion to the serviceable addressable market, though significant revenue impact may take time [42][43] Question: What are the ambitions for general market products? - There is potential for general market products to represent 10% of revenues in the long run, with ongoing efforts to leverage IP and expand this segment [59][62]