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 - Strong demand was noted for the latest generation custom-boosted amplifier and 22-nanometer smart codec in the smartphone audio business [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 [9][10] - The company is diversifying revenue streams with high-performance mixed-signal solutions, particularly in camera controllers and battery performance technologies [8][9][12] Market Data and Key Metrics Changes - The company is experiencing growth in the PC market, with significant design wins in both commercial and consumer segments [10][35] - There is a noted softness in the Android space, impacting revenue from non-flagship customers [34] - The general market products are gaining traction across professional audio, automotive, industrial, and imaging end markets [12] 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 with voice-related features for AI-enabled devices [10][42] - Continued investment in battery management technologies is seen as a crucial area for future growth [26] 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 new applications [12][35] - The company anticipates a slight decrease in inventory in the upcoming quarter and maintains a disciplined approach to operating expenses [18][19] - Management noted that seasonality in the business is shifting, primarily due to increased camera content in revenue [23] Other Important Information - The company has no debt outstanding and reported a decrease in inventory levels, ending the quarter with approximately 81 days of inventory [17][18] - Cirrus Logic will participate in the Barclays Global Technology Conference on December 11 [46] Q&A Session Summary Question: Thoughts on seasonality going forward - Management indicated that the seasonality shape of the business has changed, with camera content becoming a larger portion of total revenue, pushing some revenue earlier in the fiscal year [22][23] Question: Updates on power/battery opportunities in smartphones - Management confirmed ongoing investment in battery management technologies and expressed excitement about the potential IP in this area [25][26] Question: Clarification on OPEX and its impact on future quarters - Management noted that lower OPEX in Q2 was due to timing issues and that some expenses would carry over into Q3 [31][32] Question: Revenue trends outside of the largest customer - Management acknowledged softness in the Android space but highlighted growth potential in the PC market as a key area of focus [34][35] Question: Changes to smartphone unit outlook - Management maintained that there were no material changes to the smartphone unit outlook despite strong quarterly results [38][39] Question: Development of new products for AI PCs - Management noted significant interest in voice-related features for AI and indicated that this would expand the serviceable addressable market (SAM) for the company [40][42]