Cirrus Logic Reports Record Revenue of $619.0 Million for Fiscal Third Quarter

Rhea-AI Summary

Cirrus Logic, Inc. (CRUS) reported record revenue and earnings per share in the third quarter fiscal year 2024, with revenue of $619.0 million, GAAP gross margin of 51.3 percent, and non-GAAP gross margin of 51.4 percent. The company's current business outlook for the fourth quarter FY24 includes revenue expected to range between $290 million and $350 million, with GAAP gross margin expected to be between 49 percent and 51 percent. Cirrus Logic also achieved key milestones in the production of next-generation audio components and made progress on R&D programs in the high-performance mixed-signal business.

Insights

Financial Analyst

The financial results reported by Cirrus Logic, Inc. indicate a strong performance in the third quarter of fiscal year 2024, with a record revenue of $619.0 million and an increase in earnings per share (EPS) to $2.50 GAAP and $2.89 non-GAAP. The reported gross margin of over 51% is robust, reflecting efficient cost management and a healthy profit margin above industry average, which typically hovers around 40-50% for semiconductor companies. This financial health is critical for investors as it suggests the company's ability to generate profit relative to sales.

The cash and cash equivalents balance of $587.0 million provides the company with a solid liquidity position to fund ongoing operations and invest in research and development (R&D) without the immediate need for external financing. The forward-looking guidance for Q4 FY24, with revenue projections between $290 million and $350 million, indicates a potential decrease when compared to Q3. This could be due to seasonal fluctuations or strategic product cycle transitions. Investors should monitor this trend, as it may affect future stock performance.

Market Research Analyst

Cirrus Logic's progress in the production of next-generation audio components and advancements in process technology and foundry strategy signify a strong competitive position in the semiconductor industry. The emphasis on laptop solutions and high-performance mixed-signal business segments aligns with the growing demand for sophisticated audio solutions in consumer electronics. The company's R&D efforts are expected to drive innovation and potentially capture more market share.

Investor sentiment can be positively influenced by the company's claim of strong customer engagement and R&D progress. However, it is essential to note that the semiconductor industry is cyclical and highly competitive, with rapid technological changes. Investors should consider the risks associated with the industry's inherent volatility and the company's ability to maintain its competitive edge through continuous innovation.

Economist

The company's current business outlook, coupled with its financial results, provides insights into broader economic trends. A strong performance by a semiconductor company like Cirrus Logic may indicate healthy consumer demand for electronics and a robust supply chain capable of meeting production milestones. However, the anticipated reduction in revenue for the next quarter could point to macroeconomic headwinds or market saturation concerns.

Furthermore, the balance between GAAP and non-GAAP expenses, particularly in R&D and SG&A, reflects the company's strategic investments in innovation while managing operational costs. The disclosed non-GAAP adjustments, such as stock-based compensation and amortization of acquisition intangibles, provide a clearer picture of the company's operational efficiency and underlying profitability, which are crucial for economic analysis and forecasting.

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 2024, which ended December 30, 2023, as well as the company’s current business outlook.

“Cirrus Logic delivered record revenue and earnings per share in the December quarter,” said John Forsyth, Cirrus Logic president and chief executive officer. “In addition to our outstanding financial results, we achieved key milestones in the production of our next-generation audio components while also making exciting advances in our process technology and foundry strategy. Furthermore, customer engagement with our laptop solutions was strong, and we made excellent progress on a number of R&D programs in our high-performance mixed-signal business. With a compelling roadmap of products and an amazing track record of execution, we believe we are well-positioned to grow long-term shareholder value.”

Reported Financial Results – Third Quarter FY24

• Revenue of $619.0 million;
• GAAP gross margin of 51.3 percent and non-GAAP gross margin of 51.4 percent;
• GAAP operating expenses of $149.9 million and non-GAAP operating expenses of $125.6 million;
• GAAP earnings per share of $2.50 and non-GAAP earnings per share of $2.89; and
• Cash and cash equivalents balance of $587.0 million.

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

Business Outlook – Fourth Quarter FY24

• Revenue is expected to range between $290 million and $350 million;
• GAAP gross margin is expected to be between 49 percent and 51 percent; and
• Combined GAAP R&D and SG&A expenses are anticipated to range between $138 million and $144 million, including approximately $22 million in stock-based compensation expense and $2 million in amortization of acquisition intangibles, resulting in a non-GAAP operating expense range between $114 million and $120 million.

Cirrus Logic will host a live Q&A session at 5 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 grow long-term shareholder value; and our estimates for the fourth quarter fiscal year 2024 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, and amortization of acquisition intangibles. 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 level and timing of orders and shipments during the fourth quarter of fiscal year 2024, customer cancellations of orders, or the failure to place orders consistent with forecasts; changes with respect to our current expectations of future smartphone unit volumes; any delays in the timing and/or success of customers’ new product ramps; and the risk factors listed in our Form 10-K for the year ended March 25, 2023 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. 30,				Sep. 23,				Dec. 24,				Dec. 30,				Dec. 24,
	2023				2023				2022				2023				2022
	Q3'24				Q2'24				Q3'23				Q3'24				Q3'23
Audio	$	378,597			$	282,855			$	347,297			$	857,258			$	939,604
High-Performance Mixed-Signal		240,387				198,208				243,285				559,805				585,191
Net sales		618,984				481,063				590,582				1,417,063				1,524,795
Cost of sales		301,520				234,467				293,877				693,616				754,170
Gross profit		317,464				246,596				296,705				723,447				770,625
Gross margin		51.3	%			51.3	%			50.2	%			51.1	%			50.5	%
Research and development		112,672				104,205				118,063				323,092				343,250
Selling, general and administrative		37,604				34,323				37,262				107,306				115,502
Restructuring costs		(360	)			2,319				—				1,959				—
Total operating expenses		149,916				140,847				155,325				432,357				458,752
Income from operations		167,548				105,749				141,380				291,090				311,873
Interest income		4,889				3,729				2,777				13,218				4,367
Other expense		(337	)			(70	)			(3,716	)			(30	)			(2,915	)
Income before income taxes		172,100				109,408				140,441				304,278				313,325
Provision for income taxes		33,377				34,001				36,964				74,548				82,953
Net income	$	138,723			$	75,407			$	103,477			$	229,730			$	230,372
Basic earnings per share	$	2.57			$	1.38			$	1.87			$	4.22			$	4.13
Diluted earnings per share:	$	2.50			$	1.34			$	1.83			$	4.09			$	4.02
Weighted average number of shares:
Basic		54,016				54,503				55,239				54,449				55,748
Diluted		55,592				56,278				56,583				56,160				57,280
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. 30,				Sep. 23,				Dec. 24,				Dec. 30,				Dec. 24,
	2023				2023				2022				2023				2022
Net Income Reconciliation	Q3'24				Q2'24				Q3'23				Q3'24				Q3'23
GAAP Net Income	$	138,723			$	75,407			$	103,477			$	229,730			$	230,372
Amortization of acquisition intangibles		1,972				2,170				8,807				6,312				24,429
Stock-based compensation expense		23,067				21,331				20,487				67,113				59,108
Restructuring costs		(360	)			2,319				—				1,959				—
Acquisition-related costs		—				939				3,176				4,105				9,504
Investment write off		—				—				2,746				—				2,746
Adjustment to income taxes		(2,769	)			(604	)			(2,936	)			(9,001	)			(11,371	)
Non-GAAP Net Income	$	160,633			$	101,562			$	135,757			$	300,218			$	314,788
Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	2.50			$	1.34			$	1.83			$	4.09			$	4.02
Effect of Amortization of acquisition intangibles		0.04				0.04				0.15				0.11				0.43
Effect of Stock-based compensation expense		0.41				0.38				0.36				1.20				1.03
Effect of Restructuring costs		(0.01	)			0.04				—				0.04				—
Effect of Acquisition-related costs		—				0.01				0.06				0.07				0.17
Effect of Investment write off		—				—				0.05				—				0.05
Effect of Adjustment to income taxes		(0.05	)			(0.01	)			(0.05	)			(0.16	)			(0.20	)
Non-GAAP Diluted earnings per share	$	2.89			$	1.80			$	2.40			$	5.35			$	5.50
Operating Income Reconciliation
GAAP Operating Income	$	167,548			$	105,749			$	141,380			$	291,090			$	311,873
GAAP Operating Profit		27.1	%			22.0	%			23.9	%			20.5	%			20.5	%
Amortization of acquisition intangibles		1,972				2,170				8,807				6,312				24,429
Stock-based compensation expense - COGS		395				361				309				1,041				898
Stock-based compensation expense - R&D		16,771				15,472				14,710				48,195				41,530
Stock-based compensation expense - SG&A		5,901				5,498				5,468				17,877				16,680
Restructuring costs		(360	)			2,319				—				1,959				—
Acquisition-related costs		—				939				3,176				4,105				9,504
Non-GAAP Operating Income	$	192,227			$	132,508			$	173,850			$	370,579			$	404,914
Non-GAAP Operating Profit		31.1	%			27.5	%			29.4	%			26.2	%			26.6	%
Operating Expense Reconciliation
GAAP Operating Expenses	$	149,916			$	140,847			$	155,325			$	432,357			$	458,752
Amortization of acquisition intangibles		(1,972	)			(2,170	)			(8,807	)			(6,312	)			(24,429	)
Stock-based compensation expense - R&D		(16,771	)			(15,472	)			(14,710	)			(48,195	)			(41,530	)
Stock-based compensation expense - SG&A		(5,901	)			(5,498	)			(5,468	)			(17,877	)			(16,680	)
Restructuring costs		360				(2,319	)			—				(1,959	)			—
Acquisition-related costs		—				(939	)			(3,176	)			(4,105	)			(9,504	)
Non-GAAP Operating Expenses	$	125,632			$	114,449			$	123,164			$	353,909			$	366,609
Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	317,464			$	246,596			$	296,705			$	723,447			$	770,625
GAAP Gross Margin		51.3	%			51.3	%			50.2	%			51.1	%			50.5	%
Stock-based compensation expense - COGS		395				361				309				1,041				898
Non-GAAP Gross Profit	$	317,859			$	246,957			$	297,014			$	724,488			$	771,523
Non-GAAP Gross Margin		51.4	%			51.3	%			50.3	%			51.1	%			50.6	%
	Three Months Ended												Nine Months Ended
	Dec. 30,				Sep. 23,				Dec. 24,				Dec. 30,				Dec. 24,
	2023				2023				2022				2023				2022
Effective Tax Rate Reconciliation	Q3'24				Q2'24				Q3'23				Q3'24				Q3'23
GAAP Tax Expense	$	33,377			$	34,001			$	36,964			$	74,548			$	82,953
GAAP Effective Tax Rate		19.4	%			31.1	%			26.3	%			24.5	%			26.5	%
Adjustments to income taxes		2,769				604				2,936				9,001				11,371
Non-GAAP Tax Expense	$	36,146			$	34,605			$	39,900			$	83,549			$	94,324
Non-GAAP Effective Tax Rate		18.4	%			25.4	%			22.7	%			21.8	%			23.1	%
Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.60			$	0.60			$	0.65			$	1.33			$	1.45
Adjustments to income taxes		0.05				0.01				0.05				0.16				0.20
Non-GAAP Tax Expense	$	0.65			$	0.61			$	0.70			$	1.49			$	1.65

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
		Dec. 30,				Mar. 25,				Dec. 24,
		2023				2023				2022
ASSETS
Current assets
Cash and cash equivalents		$	483,931			$	445,784			$	434,544
Marketable securities			32,842				34,978				28,373
Accounts receivable, net			217,269				150,473				270,493
Inventories			256,675				233,450				152,426
Prepaid wafers			84,854				60,638				—
Other current assets			109,814				92,533				127,649
Total current Assets			1,185,385				1,017,856				1,013,485
Long-term marketable securities			70,260				36,509				44,784
Right-of-use lease assets			140,993				128,145				150,938
Property and equipment, net			167,579				162,972				156,602
Intangibles, net			31,677				38,876				133,032
Goodwill			435,936				435,936				435,936
Deferred tax asset			34,116				35,580				8,630
Long-term prepaid wafers			73,492				134,363				154,575
Other assets			77,675				73,729				67,907
Total assets		$	2,217,113			$	2,063,966			$	2,165,889
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	56,231			$	81,462			$	117,406
Accrued salaries and benefits			44,352				50,606				42,187
Lease liability			19,906				18,442				14,024
Acquisition-related liabilities			—				21,361				18,195
Other accrued liabilities			58,105				44,469				36,737
Total current liabilities			178,594				216,340				228,549
Non-current lease liability			138,415				122,631				143,252
Non-current income taxes			52,247				59,013				72,267
Other long-term liabilities			47,097				7,700				5,501
Total long-term liabilities			237,759				189,344				221,020
Stockholders' equity:
Capital stock			1,735,824				1,670,141				1,639,056
Accumulated earnings (deficit)			66,633				(9,320	)			80,865
Accumulated other comprehensive loss			(1,697	)			(2,539	)			(3,601	)
Total stockholders' equity			1,800,760				1,658,282				1,716,320
Total liabilities and stockholders' equity		$	2,217,113			$	2,063,966			$	2,165,889
Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
		Three Months Ended
		Dec. 30,				Dec. 24,
		2023				2022
		Q3'24				Q3'23
Cash flows from operating activities:
Net income		$	138,723			$	103,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			12,732				18,624
Stock-based compensation expense			23,067				20,487
Deferred income taxes			9,723				10,886
Loss on retirement or write-off of long-lived assets			10				3
Other non-cash charges			668				2,832
Restructuring costs			(360	)			—
Net change in operating assets and liabilities:
Accounts receivable, net			54,048				34,053
Inventories			72,257				12,145
Prepaid wafers			15,596				—
Other assets			17,973				6,458
Accounts payable and other accrued liabilities			(32,123	)			(20,521	)
Income taxes payable			1,378				(10,656	)
Acquisition-related liabilities			—				3,160
Net cash provided by operating activities			313,692				180,948
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities			5,176				3,691
Purchases of available-for-sale marketable securities			(32,334	)			(3,433	)
Purchases of property, equipment and software			(9,813	)			(6,777	)
Investments in technology			—				(831	)
Net cash used in investing activities			(36,971	)			(7,350	)
Cash flows from financing activities:
Payment of acquisition-related holdback			—				(30,949	)
Issuance of common stock, net of shares withheld for taxes			50				393
Repurchase of stock to satisfy employee tax withholding obligations			(13,722	)			(13,541	)
Repurchase and retirement of common stock			(56,923	)			(50,000	)
Net cash used in financing activities			(70,595	)			(94,097	)
Net increase in cash and cash equivalents			206,126				79,501
Cash and cash equivalents at beginning of period			277,805				355,043
Cash and cash equivalents at end of period		$	483,931			$	434,544
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 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. 30,				Dec. 30,				Sep. 23,				Jun. 24,				Mar. 25,
		2023				2023				2023				2023				2023
		Q3'24				Q3'24				Q2'24				Q1'24				Q4'23
Net cash provided by (used in) operating activities (GAAP)		$	299,414			$	313,692			$	(22,731	)		$	(39,813	)		$	48,266
Capital expenditures			(42,285	)			(9,813	)			(8,527	)			(12,310	)			(11,635	)
Free Cash Flow (Non-GAAP)		$	257,129			$	303,879			$	(31,258	)		$	(52,123	)		$	36,631
Cash Flow from Operations as a Percentage of Revenue (GAAP)			17	%			51	%			(5	)%			(13	)%			13	%
Capital Expenditures as a Percentage of Revenue (GAAP)			2	%			2	%			2	%			4	%			3	%
Free Cash Flow Margin (Non-GAAP)			14	%			49	%			(6	)%			(16	)%			10	%

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in millions; unaudited)
(not prepared in accordance with GAAP)
		Q4 FY24
		Guidance
Operating Expense Reconciliation
GAAP Operating Expenses		$138 - 144
Stock-based compensation expense		(22)
Amortization of acquisition intangibles		(2)
Non-GAAP Operating Expenses		$114 - 120

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240206115787/en/

Investor Contact:

Chelsea Heffernan

Vice President, Investor Relations

Cirrus Logic, Inc.

(512) 851-4125

Investor@cirrus.com

Source: Cirrus Logic, Inc.

FAQ

What are Cirrus Logic's (CRUS) reported financial results for the third quarter FY24?

Cirrus Logic reported revenue of $619.0 million, GAAP gross margin of 51.3 percent, and non-GAAP gross margin of 51.4 percent for the third quarter FY24.

What is Cirrus Logic's (CRUS) business outlook for the fourth quarter FY24?

Cirrus Logic's business outlook for the fourth quarter FY24 includes revenue expected to range between $290 million and $350 million, with GAAP gross margin expected to be between 49 percent and 51 percent.

Where can I listen to Cirrus Logic's (CRUS) live Q&A session 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).