CIRRUS LOGIC, INC. Q4 FY2025 earnings call

• Cirrus Logic's long-term strategy is based on three principles: maintaining leadership in core flagship smartphone audio, expanding high performance mixed signal functionality, and leveraging expertise in audio and high performance mixed signal to grow in new markets.
• In smartphone audio, two new generation products (boosted amplifier and smart codec) were shipped, with the smart codec being the first 22 nanometer product. These products are expected to provide sustained revenue contribution.
• In high performance mixed signal, camera controller product line had increased unit shipments, and investments continued in advanced battery and related technologies. Progress was made in developing key IP in these areas.
• In new markets, progress in the laptop business included securing first high volume mainstream design win with PC codec, increased engagement with PC OEMs, and expanded pipeline of design wins. In general market, new digital to analog converters, ultra high performance audio codec, timing products, and analog front end products for imaging were sampled with positive customer feedback.

In the fourth quarter of fiscal 2025, Cirrus Logic delivered revenue of $424.5 million, which was above the top end of the guidance range. For the full fiscal year 2025, total revenue was $1.9 billion, up 6% year-over-year. The non-GAAP gross profit in the March quarter was $227.1 million with a margin of 53.5%. For the full fiscal year 2025, non-GAAP gross profit was $997.4 million and margin was 52.6%. The non-GAAP operating income in the fourth quarter was $107.1 million or 25.2% of revenue. For the full fiscal year 2025, non-GAAP operating income was $503.3 million with an operating margin of 26.5%.

• For Q1 fiscal year 2026, revenue is expected to be in the range of $330 million to $390 million, down 15% sequentially and 4% year-over-year at the midpoint.
• Gross margin is expected to range from 51% to 53%.
• Non-GAAP operating expense is expected to range from $119 million to $125 million, up sequentially largely due to employee expenses.
• Fiscal year 2026 non-GAAP tax rate is expected to be approximately 21% to 23%.

• Macroeconomic environment is highly dynamic, and future trade actions could impact the business.
• Supply chain dynamics, including potential pull forwards of shipments due to tariffs, though impact was limited in the March quarter.

Q: Good afternoon, everybody. Thanks for taking my question. I didn’t see your 10-K filing. Perhaps it’s not out yet, but maybe if you can give us a preview into what your largest customer represented for your fiscal year '25 revenue? And then more broadly, for all your customers, did you see any pull forward in the fourth quarter in their production perhaps to get ahead of some tariff dates?

A: Yes. Gary, on the customer concentration figure for the full year, I think that’s 89%. And regarding the pull forwards, within the March quarter, it’s obviously difficult for us to determine with certainty without a very accurate view of sell-through, but we believe we saw it to a very limited extent. That’s to say, some of our customers, I think, pulled forward some quantity of shipments seemingly very small into the March quarter in order to have additional inventory in light of anticipated tariffs. But we don't believe we saw any clear signs that there were pull ins of the size that were material to the results that we’re reporting today. And it’s worth keeping in mind on that front that, of course, the tariffs themselves were announced after the end of the March quarter. So we believe that was a very limited impact on these numbers.

Q: Hi. This is Aren Nakpil in for Chris Rolland. Thanks for taking the question. You had previously talked about HPMS surpassing audio. Is that still the expectation? And is there a rough time frame for that transition? Audio and HPMS have had this 60-40 split for some time. So, when do you foresee that kind of flipping?

A: Yes. Thanks, Aren. To the first part of the question, I do see that happening over time. I haven’t put a particular time frame on it. As long as we can continue to grow both, we are not going to get too worked up about at what point that transition takes place. But I've highlighted that in the past really as a way of indicating that we believe HPMS opens up a ton of new SAM expansion and growth opportunity for us. And that's been a very important part of the company’s story over the past few years and it will continue to be going forward. I think we're at a period where, to your point, yes, there’s a bit of a pause in that ratio. HPMS has been growing very rapidly and we're at a bit of a kind of pause in that ratio between the two. But that’s to put that in context, a lot of that is because we're in a year where we've undergone a major refresh of our audio based content. So with the new codec and new boosted amplifiers coming out last fall, those represented a growth in the value of our audio content, which of course we're super happy about and we expect those to run for several years. But they definitely represented a step up in the value of the audio content, which obviously has a knock on effect in that in relation to the HPMS audio balance.

Q: Hey, guys. Thanks for taking my question. I wanted to understand to the extent that you can, the camera controller content road map in the future. Obviously, you don't talk about specific customers, but I had to notice from some tear downs over the last couple of months that it does look like you've seen some proliferation in the low end of the portfolio with camera controller content. So, like, should we be thinking about, the future of camera controllers being something where you need multiple across each camera? Have you kind of reached a point where that doesn't continue? But to the best of your extent, like -- to the best of your ability, can you kind of describe where does that camera controller content hit a wall?

A: Yes. Thanks, Tom. I guess one thing you may be alluding to there is that when we had the last call, there was a certain product which wasn’t on the market and hadn’t been torn down from any by anybody, which is now on the market and represents the first time we’ve had camera controller content in a kind of lower priced phone from one of our more significant customers. And we were obviously delighted about that. That was pretty significant to us. But then to your broader question, we see a considerable continued opportunity in this space. I think the way to think about it is that there are at least three vectors by which we can grow value here. One, of course, is attach rate. And as attach rate increases, that’s good for us, but you may also be thinking about whether or not that represents saturation. However, we've also seen in the evolution of our camera controllers generation by generation that there is value in increasing the processing that the product can do and in providing, for example, additional channels to drive more lens elements or increased drive strength to drive different kinds of mechanical components within the camera assembly. All of those things have been a part of the story of what got us to where we are today with camera controller content. And when we look out into the future, those factors will continue to be highly relevant for us. So we have a rich roadmap. We've got plenty of stuff in development there that we believe will continue to grow value for us in this space.

Q: Yes. Thank you. John, I know you commented on sort of maybe some pull ins from customers in the March quarter. What about what you’ve seen so far in the June quarter? Obviously, anything that is reflected in your guidance, but just wondering if you’ve seen any abnormal behavior in bookings from your customers. And what are some of the variables that you are contemplating as we navigate through this quarter? Is it mainly your customers moving manufacturing? Or what exactly are you eyeing to get a better read on what's going on near-term?

A: Yes. This is Jeff. For the June quarter, we're guiding with what we see from what our customers are telling us. Are they pulling in or not? It looks pretty normal from a quarter for us. So things look relatively stable. As far as the geographic question, customers have been trying to diversify and move some of their supply chains. And our approach is we are geographically distributed. We are trying to increase that. But we want to make sure we engage with our customers where their supply chain is and where they need us.

Q: Thank you for that, Jeff. And for you, John, I know you mentioned that you shared in the letter some of these general purpose or general market products. What exactly are your ambitions there? I mean, is there something that eventually can become 10% of your revenues? I mean, I know that’s probably premature now, but it does sound like you're trying to leverage your IP to do more. And related to that, I also saw you're sampling some timing products. Is that tied to the IP that you had for MEMS based microphones, or are these completely different IP blocks?

A: Yes. Sorry. On the timing side, no, completely different, completely non MEMS and happy that that's the case. But regarding the more general comment about the -- that part of our business, could it be 10% in the long run? I don’t see why not. If we look at that, I guess if I back up, I can explain to you what we're trying to do there and how we got here. We historically had a kind of long tail catalog business, which, certainly has in the past represented, if you go back a bit, has been, like, 15% of our business at one point. But it was relatively uninvested in. And the reason for that was when we were a smaller company with less R&D bandwidth, we were just running to keep up with our largest customers. As we've scaled and as we've seen our IP and the kind of catalog of IP that we have expand further and further, we've recognized that there are opportunities in that space to leverage some of what we've had -- what we have and kind of breathe more life into some of the business that we've got there. So it’s certainly the case when we’re doing a lot of custom silicon to some of our largest customers, that those can be very, very kind of sinusoidal in terms of the resource demands on the organization. So you go through periods where you need a huge spike in R&D bandwidth, and then that backs off. And you have, something of a kind of down slope in terms of the R&D demand. So one of the things that we started looking at a little while ago was to what extent we could exploit that along with the cutting edge IP we’ve been developing in a lot of our kind of larger business to go after segments within that kind of general market business. And to date, that’s produced some very good results. If you judge those results by customer engagement and customer adoption across a series of very high performance audio products, timing products, and analog front ends for imaging applications in variety of verticals. We’ve really had a lot of interest there. And so any one of those doesn’t move the needle from a revenue point of view, but they are really healthy gross margin, well above the corporate average gross margin, and they run for a very long time. Once they get designed in, they typically run and run. So our approach there is that over time, as we continue to leverage our IP and resources to build that up, it can be a very, very healthy complement to the rest of our business.