Cirrus Logic(CRUS) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Cirrus Logic reported record revenue of $561 million for the September quarter, which was at the top end of guidance, driven by demand for smartphone components [4][15] - Revenue increased by 38% sequentially due to higher smartphone unit volumes and was up 4% year-over-year [15] - Non-GAAP gross profit was $294.7 million with a gross margin of 52.5%, reflecting a favorable product mix [15][17] - Non-GAAP operating income was $167 million, representing 29.8% of revenue [16] - Non-GAAP net income for the quarter was $150 million, resulting in earnings per share of $2.83 [17] - The company ended the quarter with $896 million in cash and investments, up $48.3 million from the prior quarter [17] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw strong demand for the latest generation custom-boosted amplifier and smart codec, contributing significantly to revenue [5][6] - Engagement in the PC market is increasing, with strong design activity and expectations for new consumer and commercial laptops featuring Cirrus Logic components [10][12] - The company is diversifying revenue streams with high-performance mixed-signal solutions, particularly in camera controllers and battery performance technologies [9][10] Market Data and Key Metrics Changes - The company noted strong interest in general market products across professional audio, automotive, industrial, and imaging end markets, which typically have long life cycles and higher gross margins [12] - The Android ecosystem remains a valuable contributor, although there was some softness in the Android space impacting revenue [36] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed-signal solutions, and leveraging expertise in new markets [4][5] - The company aims to penetrate the PC market further, particularly in mainstream consumer laptops, to capture a larger share of the addressable market [10][36] - There is a strong emphasis on developing voice-related features for AI-enabled PCs, which is expected to enhance product offerings and market reach [42][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the traction in the PC market and the potential for growth in battery management technologies for smartphones [10][27] - The company does not foresee significant changes in seasonality for the remainder of the fiscal year, maintaining historical patterns [24][39] - Management highlighted the importance of disciplined operating expenses and the potential for future increases if high-confidence opportunities arise [33] Other Important Information - The company has no outstanding debt and reported a decrease in inventory to $236.4 million, with approximately 81 days of inventory at the end of the quarter [17][18] - Cirrus Logic plans to participate in the Barclays Global Technology Conference on December 11 [46] Q&A Session Summary Question: Thoughts on seasonality going forward - Management noted a change in the seasonality shape due to increased camera content, which has shifted revenue patterns earlier in the fiscal year [24] Question: Updates on power/battery opportunities in smartphones - Management confirmed ongoing investment in battery management technologies and expressed excitement about the potential impact on power efficiency and battery health [27] Question: Clarification on OPEX and its impact on future quarters - Management indicated that lower OPEX in Q2 was primarily due to timing issues and that some expenses would carry into Q3 [31][33] Question: Revenue trends outside of the largest customer - Management acknowledged softness in the Android space but highlighted strong growth potential in the PC market, particularly with recent design wins in mainstream laptops [36] Question: Changes to smartphone unit outlook - Management maintained that there were no material changes to the smartphone unit outlook, consistent with previous assessments [39] Question: New products for AI PCs and revenue expectations - Management noted significant interest in voice-related features for AI PCs and indicated that initial sampling of new products is underway, with revenue expected to materialize over time [43][44]