Cirrus Logic Reports Fiscal Third Quarter Revenue of $590.6 Million

Rhea-AI Summary

Cirrus Logic (NASDAQ: CRUS) reported record revenue of $590.6 million for Q3 FY23, exceeding guidance due to strong smartphone demand. The GAAP gross margin was 50.2% with GAAP EPS at $1.83. The company's business outlook for Q4 FY23 predicts revenue between $340 million and $400 million, with gross margin expected between 49% and 51%. Operating expenses are anticipated to range from $153 million to $159 million, including various costs. The CEO highlighted ongoing product developments and opportunities for growth in new markets.

Positive

• Record Q3 FY23 revenue of $590.6 million, driven by smartphone sales.
• GAAP gross margin at 50.2%, indicating strong profitability.
• Positive business outlook with Q4 revenue guidance of $340-$400 million.

Negative

• None.

Smartphone Sales Drive Record Revenue

AUSTIN, Texas--(BUSINESS WIRE)-- Cirrus Logic, Inc. (NASDAQ: CRUS) today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2023, which ended December 24, 2022, as well as the company’s current business outlook.

“Cirrus Logic delivered record revenue in the December quarter, with sales driven above the high end of guidance by demand for smartphones,” said John Forsyth, Cirrus Logic president and chief executive officer. “During the quarter, customer engagement across our product portfolio remained strong. We taped out our next-generation 22-nanometer smart codec and we made excellent progress on numerous other audio and high-performance mixed-signal products. Going forward, we will continue to leverage our intellectual property into other applications and markets as we target opportunities for incremental content, including in the areas of sensing, charging, and power. With a solid product roadmap and a deep commitment to innovation, we believe Cirrus Logic is well-positioned to drive further growth and product diversification in the future.”

Reported Financial Results – Third Quarter FY23

• Revenue of $590.6 million;
• GAAP and non-GAAP gross margin of 50.2 percent and 50.3 percent;
• GAAP operating expenses of $155.3 million and non-GAAP operating expenses of $123.2 million; and
• GAAP earnings per share of $1.83 and non-GAAP earnings per share of $2.40.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY23

• Revenue is expected to range between $340 million and $400 million;
• GAAP gross margin is forecasted to be between 49 percent and 51 percent; and
• Combined GAAP R&D and SG&A expenses are anticipated to range between $153 million and $159 million, including approximately $22 million in stock-based compensation expense, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Cirrus Logic will host a live Q&A session at 6 p.m. EST today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (647) 362-9199, or toll-free at (800) 770-2030 (Access Code: 95424).

About Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, effective tax rate, free cash flow, and free cash flow margin. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about our ability to leverage our intellectual property into other applications and markets including in the areas of sensing, charging, and power; our ability to drive incremental content, growth, and product diversification in the future; and our estimates for the fourth quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially, and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S and overseas; the level and timing of orders and shipments during the fourth quarter of fiscal year 2023, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 26, 2022 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary Financial Data Follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data; unaudited)
	Three Months Ended												Nine Months Ended
	Dec. 24,				Sep. 24,				Dec. 25,				Dec. 24,				Dec. 25,
	2022				2022				2021				2022				2021
	Q3'23				Q2'23				Q3'22				Q3'23				Q3'22
Audio	$	347,297			$	337,811			$	341,897			$	939,604			$	860,027
High-Performance Mixed-Signal		243,285				202,763				206,452				585,191				431,461
Net sales		590,582				540,574				548,349				1,524,795				1,291,488
Cost of sales		293,877				269,288				258,827				754,170				626,576
Gross profit		296,705				271,286				289,522				770,625				664,912
Gross margin		50.2	%			50.2	%			52.8	%			50.5	%			51.5	%
Research and development		118,063				115,471				107,101				343,250				294,913
Selling, general and administrative		37,262				39,598				38,247				115,502				111,526
Total operating expenses		155,325				155,069				145,348				458,752				406,439
Income from operations		141,380				116,217				144,174				311,873				258,473
Interest income		2,777				1,285				(78	)			4,367				718
Other income (expense)		(3,716	)			295				(87	)			(2,915	)			1,530
Income before income taxes		140,441				117,797				144,009				313,325				260,721
Provision for income taxes		36,964				30,609				16,373				82,953				30,780
Net income	$	103,477			$	87,188			$	127,636			$	230,372			$	229,941
Basic earnings per share:	$	1.87			$	1.56			$	2.23			$	4.13			$	4.01
Diluted earnings per share:	$	1.83			$	1.52			$	2.16			$	4.02			$	3.88
Weighted average number of shares:
Basic		55,239				55,726				57,178				55,748				57,374
Diluted		56,583				57,418				59,031				57,280				59,317
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(not prepared in accordance with GAAP)
Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
	Three Months Ended												Nine Months Ended
	Dec. 24,				Sep. 24,				Dec. 25,				Dec. 24,				Dec. 25,
	2022				2022				2021				2022				2021
Net Income Reconciliation	Q3'23				Q2'23				Q3'22				Q3'23				Q3'22
GAAP Net Income	$	103,477			$	87,188			$	127,636			$	230,372			$	229,941
Amortization of acquisition intangibles		8,807				7,787				9,083				24,429				19,135
Stock-based compensation expense		20,487				20,483				17,833				59,108				49,368
Acquisition-related costs		3,176				3,164				3,155				9,504				8,989
Investment write off		2,746				—				—				2,746				—
Adjustment to income taxes		(2,936	)			(4,135	)			(7,903	)			(11,371	)			(16,897	)
Non-GAAP Net Income	$	135,757			$	114,487			$	149,804			$	314,788			$	290,536
Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	1.83			$	1.52			$	2.16			$	4.02			$	3.88
Effect of Amortization of acquisition intangibles		0.15				0.14				0.16				0.43				0.32
Effect of Stock-based compensation expense		0.36				0.35				0.30				1.03				0.83
Effect of Acquisition-related costs		0.06				0.05				0.05				0.17				0.15
Effect of Investment write off		0.05				—				—				0.05				—
Effect of Adjustment to income taxes		(0.05	)			(0.07	)			(0.13	)			(0.20	)			(0.28	)
Non-GAAP Diluted earnings per share	$	2.40			$	1.99			$	2.54			$	5.50			$	4.90
Operating Income Reconciliation
GAAP Operating Income	$	141,380			$	116,217			$	144,174			$	311,873			$	258,473
GAAP Operating Profit		23.9	%			21.5	%			26.3	%			20.5	%			20.0	%
Amortization of acquisition intangibles		8,807				7,787				9,083				24,429				19,135
Stock-based compensation expense - COGS		309				312				245				898				763
Stock-based compensation expense - R&D		14,710				14,228				12,260				41,530				32,368
Stock-based compensation expense - SG&A		5,468				5,943				5,328				16,680				16,237
Acquisition-related costs		3,176				3,164				3,155				9,504				8,989
Non-GAAP Operating Income	$	173,850			$	147,651			$	174,245			$	404,914			$	335,965
Non-GAAP Operating Profit		29.4	%			27.3	%			31.8	%			26.6	%			26.0	%
Operating Expense Reconciliation
GAAP Operating Expenses	$	155,325			$	155,069			$	145,348			$	458,752			$	406,439
Amortization of acquisition intangibles		(8,807	)			(7,787	)			(9,083	)			(24,429	)			(19,135	)
Stock-based compensation expense - R&D		(14,710	)			(14,228	)			(12,260	)			(41,530	)			(32,368	)
Stock-based compensation expense - SG&A		(5,468	)			(5,943	)			(5,328	)			(16,680	)			(16,237	)
Acquisition-related costs		(3,176	)			(3,164	)			(3,155	)			(9,504	)			(5,528	)
Non-GAAP Operating Expenses	$	123,164			$	123,947			$	115,522			$	366,609			$	333,171
Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	296,705			$	271,286			$	289,522			$	770,625			$	664,912
GAAP Gross Margin		50.2	%			50.2	%			52.8	%			50.5	%			51.5	%
Acquisition-related costs		—				—				—				—				3,461
Stock-based compensation expense - COGS		309				312				245				898				763
Non-GAAP Gross Profit	$	297,014			$	271,598			$	289,767			$	771,523			$	669,136
Non-GAAP Gross Margin		50.3	%			50.2	%			52.8	%			50.6	%			51.8	%
Effective Tax Rate Reconciliation
GAAP Tax Expense	$	36,964			$	30,609			$	16,373			$	82,953			$	30,780
GAAP Effective Tax Rate		26.3	%			26.0	%			11.4	%			26.5	%			11.8	%
Adjustments to income taxes		2,936				4,135				7,903				11,371				16,897
Non-GAAP Tax Expense	$	39,900			$	34,744			$	24,276			$	94,324			$	47,677
Non-GAAP Effective Tax Rate		22.7	%			23.3	%			13.9	%			23.1	%			14.1	%
Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.65			$	0.53			$	0.28			$	1.45			$	0.52
Adjustments to income taxes		0.05				0.07				0.13				0.20				0.28
Non-GAAP Tax Expense	$	0.70			$	0.60			$	0.41			$	1.65			$	0.80

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
		Dec. 24,				Mar. 26,				Dec. 25,
			2022				2022				2021
ASSETS
Current assets
Cash and cash equivalents		$	434,544			$	369,814			$	195,121
Marketable securities			28,373				10,601				3,719
Accounts receivable, net			270,493				240,264				326,131
Inventories			152,426				138,436				148,525
Other current assets			127,649				80,900				90,025
Total current Assets			1,013,485				840,015				763,521
Long-term marketable securities			44,784				63,749				72,118
Right-of-use lease assets			150,938				171,003				173,054
Property and equipment, net			156,602				157,077				157,186
Intangibles, net			133,032				158,145				165,581
Goodwill			435,936				435,791				437,783
Deferred tax asset			8,630				11,068				7,203
Long-term prepaid wafers			154,575				195,000				195,000
Other assets			67,907				91,552				96,671
Total assets		$	2,165,889			$	2,123,400			$	2,068,117
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	117,406			$	115,417			$	110,250
Accrued salaries and benefits			42,187				65,261				43,044
Lease liability			14,024				14,680				14,653
Acquisition-related liabilities			18,195				30,964				30,964
Other accrued liabilities			36,737				38,461				40,603
Total current liabilities			228,549				264,783				239,514
Non-current lease liability			143,252				163,162				164,896
Non-current income taxes			72,267				73,383				77,683
Long-term acquisition-related liabilities			—				8,692				5,528
Other long-term liabilities			5,501				13,563				17,749
Total long-term liabilities			221,020				258,800				265,856
Stockholders' equity:
Capital stock			1,639,056				1,578,427				1,556,746
Accumulated earnings			80,865				23,435				6,416
Accumulated other comprehensive loss			(3,601	)			(2,045	)			(415	)
Total stockholders' equity			1,716,320				1,599,817				1,562,747
Total liabilities and stockholders' equity		$	2,165,889			$	2,123,400			$	2,068,117
Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
		Three Months Ended
		Dec. 24,				Dec. 25,
		2022				2021
		Q3'23				Q3'22
Cash flows from operating activities:
Net income		$	103,477			$	127,636
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			18,624				17,446
Stock-based compensation expense			20,487				17,832
Deferred income taxes			10,886				733
Loss on retirement or write-off of long-lived assets			3				196
Other non-cash charges			2,832				82
Net change in operating assets and liabilities:
Accounts receivable, net			34,053				(45,165	)
Inventories			12,145				39,835
Other assets			6,458				208
Accounts payable and other accrued liabilities			(20,521	)			(293,661	)
Income taxes payable			(10,656	)			(4,161	)
Acquisition-related liabilities			3,160				3,164
Net cash provided by (used in) operating activities			180,948				(135,855	)
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities			3,691				8,946
Purchases of available-for-sale marketable securities			(3,433	)			(9,553	)
Purchases of property, equipment and software			(6,777	)			(3,363	)
Investments in technology			(831	)			(361	)
Acquisition-related payments			—				(1,242	)
Net cash used in investing activities			(7,350	)			(5,573	)
Cash flows from financing activities:
Debt issuance costs			—				(2	)
Payment of acquisition-related holdback			(30,949	)			—
Issuance of common stock, net of shares withheld for taxes			393				5,359
Repurchase of stock to satisfy employee tax withholding obligations			(13,541	)			(15,550	)
Repurchase and retirement of common stock			(50,000	)			(39,999	)
Net cash used in financing activities			(94,097	)			(50,192	)
Net increase (decrease) in cash and cash equivalents			79,501				(191,620	)
Cash and cash equivalents at beginning of period			355,043				386,741
Cash and cash equivalents at end of period		$	434,544			$	195,121
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)
Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.
		Twelve Months Ended				Three Months Ended
		Dec. 24,				Dec. 24,				Sep. 24,				Jun. 25,				Mar. 26,
		2022				2022				2022				2022				2022
		Q3'23				Q3'23				Q2'23				Q1'23				Q4'22
Net cash provided by operating activities (GAAP)		$	549,533			$	180,948			$	35,989			$	74,365			$	258,231
Capital expenditures			(33,535	)			(7,608	)			(10,247	)			(7,224	)			(8,456	)
Free Cash Flow (Non-GAAP)		$	515,998			$	173,340			$	25,742			$	67,141			$	249,775
Cash Flow from Operations as a Percentage of Revenue (GAAP)			27	%			31	%			7	%			19	%			53	%
Capital Expenditures as a Percentage of Revenue (GAAP)			2	%			1	%			2	%			2	%			2	%
Free Cash Flow Margin (Non-GAAP)			26	%			29	%			5	%			17	%			51	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230202005361/en/

Investor Contact:

Chelsea Heffernan

Vice President, Investor Relations

Cirrus Logic, Inc.

(512) 851-4125

Investor@cirrus.com

Source: Cirrus Logic, Inc.

FAQ

What were the earnings results for Cirrus Logic in Q3 FY23?

Cirrus Logic reported Q3 FY23 revenue of $590.6 million and GAAP earnings per share of $1.83.

What is Cirrus Logic's outlook for Q4 FY23?

The company expects Q4 FY23 revenue to be between $340 million and $400 million.

What was the gross margin for Cirrus Logic in Q3 FY23?

The GAAP gross margin for Q3 FY23 was 50.2%.

What factors drove revenue growth for Cirrus Logic in Q3 FY23?

Revenue growth was driven primarily by strong demand for smartphones.

How did Cirrus Logic perform compared to its guidance?

The company exceeded its revenue guidance for Q3 FY23, achieving record revenue.