Cirrus Logic Inc. CRUS reported second-quarter fiscal 2025 adjusted earnings per share (EPS) of $2.25, which surpassed the Zacks Consensus Estimate by 10.8%. Also, the bottom line expanded 25% from the prior-year quarter's earnings of $1.8.

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Quarterly revenues of $541.9 million beat the Zacks Consensus Estimate by 4.2% and soared 12.6% year over year. The top line was close to the high end of CRUS’ projected guidance range. The company attributes this strong revenue growth to heightened demand for products in the smartphone sector and significant expansion in the laptop market.

The company’s largest customer accounted for 90% of total revenues in the fiscal second quarter.

Segment Details

This Texas-based company rearranged its reportable segments and created separate categories — High-Performance Mixed-Signal and Audio — in the fourth quarter of fiscal 2021. Cirrus Logic is expanding into other applications such as laptops, gaming, tablets and AR/VR.

Cirrus Logic’s High-Performance Mixed-Signal segment includes a few of its non-audio products. It contributed 42% to total revenues in the fiscal second quarter. Revenues from the same division rose 13.6% year over year to $225.3 million. We estimated the metric to be $216 million.

The Audio segment’s sales grew 11.9% to $316.6 million and contributed 58% to total revenues. Our estimate was $304 million for the segment.

Margins

Non-GAAP gross margin expanded 90 basis points year over year to 52.2%. The uptick is driven by a favorable product mix strategy amid higher supply chain expenses.

Cirrus Logic’s non-GAAP operating expenses rose 10.8% year over year to $126.8 million due to increasing variable compensation, employee-related costs and rising product development costs.

Non-GAAP operating income of $156.2 million grew 17.9% year over year. Non-GAAP operating profit margin increased to 28.8% from 27.5%.

Balance Sheet and Cash Flow

The company exited the fiscal second quarter with cash and marketable securities of $478.3 million compared with $312.4 million as of Sept. 23, 2023.

As of Sept. 28, 2024, accounts receivables were $324.1 million compared with $190.1 million as of June 29, 2024.

In the fiscal second quarter, CRUS generated $8.2 million of net cash from operations. In the prior-year quarter, it utilized $22.7 million of net cash from operations. Free cash flow was $5.5 million in the quarter under review.

The company repurchased 356,432 shares worth $50 million in the reported quarter. As of Sept. 28, 2024, it had $224.1 million worth of shares under its existing share repurchase authorization.

Fiscal Q3 Outlook

Management projects revenues between $480 million and $540 million.

Combined GAAP R&D and SG&A are anticipated to be between $148 million and $154 million, respectively. 

The GAAP gross margin is expected to be in the range of 51-53%.

Non-GAAP operating expenses are estimated to be in the band of $124-$130 million.

CRUS’ Zacks Rank

Cirrus Logic currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Itron Inc ITRI reported non-GAAP EPS of $1.84 for third-quarter 2024, which beat the Zacks Consensus Estimate by 62.8%. The company reported earnings of 98 cents in the prior-year quarter.

Shares of ITRI gained 77% in the past year. 

Watts Water Technologies, Inc. WTS reported third-quarter 2024 adjusted EPS of $2.03 compared with $2.04 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 2%.

Shares of WTS have gained 5.2% in the past year. 

Western Digital Corporation WDC reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.

Shares of WDC have gained 51.1% in the past year. 

 

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