• Revenue: $541.9 million, up 45% sequentially and 13% year-over-year.
• Gross Profit: $282.9 million (non-GAAP).
• Gross Margin: 52.2% (non-GAAP), up 160 basis points sequentially and 90 basis points year-over-year.
• Operating Expenses: $126.8 million (non-GAAP), up $8.8 million sequentially and $12.3 million year-over-year.
• Operating Income: $156.2 million (non-GAAP), representing 28.8% of revenue.
• Net Income: $125.3 million (non-GAAP).
• Earnings Per Share: $2.25 (non-GAAP), a record for the September quarter.
• Cash and Investments: $706.6 million, down $38 million from the prior quarter.
• Inventory: $271.8 million, with 96 days of inventory.
• Cash Flow from Operations: $8.2 million for the September quarter.
• CapEx: $2.7 million for the September quarter.
• Free Cash Flow Margin: Approximately 1% for the September quarter.
• Share Repurchases: $50 million spent to repurchase approximately 356,000 shares.
• Guidance for Q3 FY25 Revenue: Expected to range from $480 million to $540 million.
• Guidance for Q3 FY25 Gross Margin: Expected to range from 51% to 53% (GAAP).
• Guidance for Q3 FY25 Operating Expenses: Expected to range from $124 million to $130 million (non-GAAP).
• Guidance for FY25 Tax Rate: Expected to be approximately 22% to 24% (non-GAAP).

• Warning! GuruFocus has detected 3 Warning Sign with CRUS.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cirrus Logic Inc (NASDAQ:CRUS) delivered record revenue and earnings per share for the September quarter, with revenue reaching $541.9 million, near the top end of their guidance range.
• The company successfully began shipping its next-generation custom boosted amplifier and its first 22 nanometer smart codec in newly launched smartphones, showcasing significant engineering advancements.
• There is continued success in the high-performance mixed signal solutions area, particularly with the camera controller product line, which has seen increased value over time.
• Cirrus Logic Inc (NASDAQ:CRUS) secured its first high-volume mainstream design win with its latest PC codec, indicating progress in the laptop market.
• The company maintains a strong balance sheet with $706.6 million in cash and investments and no debt outstanding, allowing for continued share repurchases and strategic investments.

Negative Points

• The December quarter guidance reflects a larger than typical seasonal decline, influenced by a shift in fiscal year timing and previous high Android production.
• Non-GAAP operating expenses increased year-over-year due to higher employee-related expenses, increased variable compensation, and higher product development costs.
• The company anticipates a slight increase in inventory dollars moving into FY26, which could impact cash flow and operational flexibility.
• Cash flow from operations was relatively low at $8.2 million for the September quarter, resulting in a non-GAAP free cash flow margin of roughly 1%.
• There is uncertainty in the March quarter outlook due to variable demand during the holiday period, making it challenging to predict future performance accurately.

Q & A Highlights

Q: Can you explain the larger than typical seasonal decline for December and how it affects March projections? A: John Forsyth, CEO: The December quarter is influenced by several factors, including an extra week of higher volume production in September due to a 53-week fiscal year last year, and a 14-week December quarter last year. Additionally, last year's December quarter had more Android production. For March, we typically see a wide range of seasonality, but we don't guide more than one quarter out. Historically, March has seen declines ranging from 11% to 40%, with an average around 30%.

Q: Regarding wafer obligations, will inventory build continue into next year, and are there any other concerns? A: Ulf Habermann, Interim CFO: We expect to build inventory into early FY26 to fulfill wafer obligations, but this inventory is for long-term selling products. We are managing our commitments with Global Foundries and expect inventory to increase as we meet demand.

Q: Has the unusual timing of your largest customer's updates affected your operations? A: John Forsyth, CEO: The biggest impact is the later end of our September quarter. We are still in the early stages of new product cycles, and while there is a significant amount of content ramping, we need to see how the holiday period affects demand before making further assessments.

Q: Can you discuss the potential for power conversion ICs in smartphones, similar to their use in laptops? A: John Forsyth, CEO: We are excited about our power conversion chips in laptops, which offer high efficiency and less heat generation. While we do sell power-related products in smartphones, the current focus for R&D in power is more on the laptop market, which we see as a larger opportunity.

Q: How should we think about growth in smartphones, considering both content and unit sales? A: John Forsyth, CEO: We aim to grow even if smartphone units remain flat, focusing on adding value through new sockets and incremental additions to existing ones. We believe there are significant opportunities in areas like camera and power, and we are investing in R&D to capture these opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.