CRUS - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year 2018 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time.

conference being this purposes. for reminder, a call recorded is replay As would the turn like call I to Mr. conference now over to Chief Financial Case, Thurman Officer. Mr. begin. may you Case,

Thurman K. Case

Thank you and afternoon. good

current as could website, from differ otherwise. Commission risk factors filings we session, and Please corporate information, Exchange obligation Logic developments Form results discussion uncertainties that earnings result and subject Jason me or non-GAAP available approximately Director cause our X:XX expectations. actual the may projections release, this company XXXX reconciliation from Shareholder the Relations. press our The most to our of and call of Cirrus This of refer Securities this Joining third or call as announced directly GAAP Investor Officer; as projections. no company Letter is PM update we new financial other via during information, Investor projections results actual all financial us any session, available company's the statements, to Cirrus to revise today's the Logic's Chelsea forward-looking questions whether statements By Eastern. the on investor.relations@cirrus.com. at of e-mail results the covering investor.cirrus.com. results, Q&A President as a and undertakes discussing at at may latest cause financial will well that press Chief those providing Today, Heffernan, to that quarter webcast differ well to and Executive release as additional and year other is the the Rhode, issued feature Please are today, including comparable our Relations information for fiscal that to website or note of the materially at risks forward-looking questions the to made along make from materially submitted a this on are which for and analysts XX-K with with XX-Q, the

Now, to call Jason. I'll the turn over

Jason P. Rhode

Thank you, Thurman.

few taking comments. begin we a to make Before questions, I'd like

of posted profit on our results, For operating of read were $X.XX million, and XX%, non-GAAP QX earnings non-GAAP XX%. detailed Cirrus and financial of revenue the GAAP account $XXX.X please $X.XX profit a of our GAAP Investor website. and reported respectively. operating per Logic Relations share Shareholder Letter

As a result conclusions concentration draw the our customer investment about from our to after until and earnings. of our announce our largest our chose we of tendency largest meaningful results, wait customer's community to results to the

design late weakness for our that remained in unanticipated materialized While demand position the revenue key with quarter strong, smartphone reflects in customers December.

Although sales portfolio on we maintaining we our anticipate in compelling revenue future a flat. visibility, Based fuel expect our QX robust current focused strong outlook in key be FY of the QX disappointing, will customers, a timely delivering manner remains in opportunities. on will with growth and relatively components our which and are relationship company XXXX,

MEMS smart of increase of customers in the robust roadmap stages various penetration our coming hi-fi serve. With sophisticated extensive increasingly broad decks, markets software year a activity XXXX contribute capabilities calendar amplifiers, in is substantial Android with signal core to believe as we complex of digital believe processing designing the microphones at will we resumption a codecs, the boosted expand potential roadmap, future the a power into timeframe. is and product Logic's existing new of voice and and and exciting We we levels, and actively an components of we with However, customers bright believe growth is of years. the combined engaged ultra-low design in to audio components important development, portfolio have portfolio competency analog in that company Cirrus in our

is like to relationship. Operator, intense to begin accordance business discuss we Q&A, our our customer, the with about to our we're understand largest also ready not we there would interest specifics policy, that related do we now I Before take note in while questions.

Operator

Thank you.

Internet International]. [Susquehanna Your first Rolland the comes of question from Christopher from (sic) line Susquehanna

open. this of line Group, start LLP is you taking David in is International I guys. David to guess question this do Thanks any or - the back Hey, you Haberle of believe around have might but weakness Rolland. that Haberle materialized kind that XXXX? on Chris (SIG) I unanticipated during the This into today. our thoughts expect Susquehanna Your for QX, out, December, guide continue implies for when expectations to bounce behalf smartphone that

Jason P. Rhode

obviously, even the way then sense I of at can to in but ramp the day, with what it's of their case. cases, end I heavily really industry supply And us exaggerated other bit and if what many way flu. the in the how relative No, a mean, worse know exact reconcile happens a guided. have our cold, point in demand, the don't than pretty to gets we hits our that semiconductor what customers – that, some even this little folks the – a is catch that in suppliers, to customers. when you in of means we've operates Because it an impact at ones the major one our

think day, in period supply certainly and chain. get was we a the not I supply the all the across at where is check a it's to – got So, the it falling, end demand but of sky don't back

a have we markets cycle. to don't the we going than as super We healthy guidance pretty And forward. particular no, and it think any good rather serving relates are robust. perhaps we're cycle, so, got And a

again, any in is infinity good and the The period. lot into of growth, drive hit we did not diversification current a trends the but So, would we've expect certainly great to we contribute falling us which expect future out as extrapolate bunch a as that well. news for the sky of see works will to got to don't anything things

track right the we're think the for on long term. I So,

anywhere (SIG) And then David pretty of that's heavy Susquehanna Or or Group, of on things on opportunities on So you SG&A spent LLP side? tighten R&D R&D got side, on the there it. OpEx the the flattish, there investor is a still XXXX stand. XXXX, where do being fiscal kind side? to International if plan I Haberle - the kind are

Jason P. Rhode

– that we'd expenses we the a big an Well, hurry, case where we're year at it got obviously, we R&D (XX:XX:XX) resource kind at past, had balance where things from in would But a lot didn't And timeframe. the got look that in calendar a our they're closer is some sort of behind same taking gunning the and that flattish, managing be to in so the perspective pretty really compelling things against we've time, prudently. we've in where the we're for like is. XXXX of get

kind at an year, pick for of need things the difficult to and this adjustment things. to have I'd your need on (XX:XX:XX) as It's Difficulty] we that X% but guide [Technical balance couple OpEx then point. and something to it models eye for be those something So know we'll make you'll I keep accordingly. XX% unfold useful, in the range growth and

Operator

Tore line from Your Svanberg next Stifel. question from of the comes

is line open. Your

Tore Egil Svanberg

you Thank I little you. be can't bit most could near was Yes. If you a term, hoping Obviously, the calibrate it's could opportunities. excited you new all or Thank just are which calibrate, great. you wireless whether about that'd ones biometrics give you. specifics, but headsets? Jason,

Jason P. Rhode

space. with for Sure. are space the the probable the talking home has biggest great I amp closest on We're probably the in expect of front, case, continuing new for in going customer got to amplifiers. I strong things rest up strong that are that the DSP on say space base-hits community that wrong be nothing particular. line. good reception the We've the but are things about that we're I things year most in We've codec that that smart community the the exciting rack the that either, is the particularly in actually mean, for in to that really, of – kind this I'd terms things XX-nanometer and product will are with of great Android demand device. received this mean, the integrated really on progress another made Android

very good So clearly job. done the a team's

but and some XXXX. be detail the stage, see Letter in couple interests year for that's pieces of calendar We about headsets gotten expect back company. transformative more roadmap. moving we've So process. And more there. voice we to next-generation a biometrics, for device the of There's design as this in a opportunities big be course, good getting well, has that base-hits elaborate that the It to coming some fiscal probably are those a for potential working the lots of which out well. again setting broadened We've then, is very

product excited that that And there's extremely to company long be do demos, so, decreased over that what it's line enthusiasm has seen been solid. the seen But about reception. in want for our have cautious might We're term. nothing that on. that has the extremely, pitch, the extremely Folks for the we customer one

so good And all those really of fronts. things look on

Tore Egil Svanberg

kind yet? in. a us just what getting microphone? just market, talk you And of update we're maybe could ready also you MEMS inning that prime it good. on Or Very Is for time about little could bit

Jason P. Rhode

supply team the in the work well front microphones off lot I'd something being Logic's indicated obviously is all we to with now cause of and on do going in initially ship the but the see. to very ourselves Tier same continued part has There's model. things currently be technical drama, We centric but couple us. down to – very time, We're of and current job than our strong. not the business business Let's do last pre-game good the now, confidently of really difficult – the calls. of remaining which Taiwan, chain of say But show to Cirrus And well, can being in a of way. a this interest affairs poll most doing customers we're very We've for interesting X table premise very of small list football some season. we're not there, got time difficult customer quantity supplier very is a of The in challenges. the is is and between still vendors providing state of back. we're comfortable pride that couple we've don't a heavily prime the that's make able quantities the we're Customer from of the microphones an saying us our rather well, a that to a reliable can on are really knocking technical it lot at have. as challenges would pound that of small that that

nothing continue has opportunity would we've device, on and which, doing, else really one that comfortable units in for we're of out to today. product So play really a us, one rendered case everything single-sourced our vectors we've offers the further from with position millions of got that's is the but that diminished once growth for the still the that's that's one opportunity still that that's I be where that of good line would a view today. to differentiate it there, ones a not customers that's say hundreds lot again, of to shipping us synergistic

work So, still good to be done. progress,

Operator

Your the Rajvindra Needham line comes Company. next question from & from Gill of

Your open. line is

Rajvindra S. Gill

as of last provide The respect story question maybe pricing, the questions. your as the describe year? would to customer, as versus what environment say, top views can well whatever you terms you (XX:XX:XX) Difficulty] year, with as be this pricing But on great. the content can content are information [Techinical well in your

Jason P. Rhode

of Well, the would is enjoy always nothing customers on suddenly perspective, pricing I the suppliers. must going I our news start business articles on. unusual the I a usual. as year the mean, that cracking case. wasn't about from It's have one missed say, how I when whip their it's, to going

on unusual nothing say would I So, front. that

concerned, content's that is expect year. appropriate we for get other as be color to the than years in the far point – this contemplated whatever we for into would have us nothing As for provided the we fiscal to at happened

on So lot drama I of say. not front, that would a

Rajvindra S. Gill

couple market is a in your of seems the digital which opportunities, on I companies with You kind about a opportunity business, taking can bit That's the like the earlier business of of off. The of respect How USB-C that's lot lot direct adoption. you that headset about handsets. this parts talk call. would USB-C USB-C? there's of correlation last other that a a years? space the are part you characterize to take say, the talking to bit of the to a year, off. know based a accelerating in bit attach little of it the And adoption, digital versus are rates other taking the little mentioned time

Jason P. Rhode

taken hit chipset other with of jack, headsets. because to solution USB-C you uncertainty addressed. needed particular, in I really the USB-C particular, expected customers challenges, think, do we to stuff on out variety things seems kind unfolding a round-trip do longer That headphone also for about calls not, there. kind have streaming technical The vendors ship the of were the voice head. a then and for matter to be in that both got has and We've than latency remove some that And reasonable all now. There's enabled perfectly the technical to just good opportunities solutions we nail there off to be that. take of Well, core respect compelling with audio,

are have forward there for out. sure, So opportunities also our more I that been is well-rounded our going getting and bigger product they would than say line

So and functions direction different whatnot. compelling me seems for everybody time. that It targeting move over that price and be to will fairly features solutions better might we've in got that the and market points

we're to we we're make well sure that for to – just So, as positioned make possible need them. as sure continue

Rajvindra S. Gill

it. you. Got Thank

Operator

the from Barclays. of comes Curtis from question next Blayne line Your

Your is line open.

Jerry Zhang

Letter, Zhang flattish biometrics. XXXX on in are and for Hey, to is And a opportunities, your from In had question your leading each taking between contribution you. of guys. question. Jerry you I just Android, my what customer Blayne. your some This and fiscal guide? for the opportunities ANC, for about these guess talked Thanks I

Jason P. Rhode

Yeah, well, below generally we that anyway. it break much down line don't

undramatic flattish pricing from ASP perspective and we're continuing on always would just modeled. it's base-hits a company's our things. the it kind got think rack to say of progress erosion all We're we've of of the kind our other a I relatively is of I initiatives. year. mean, it's up I a great initiatives. some There's making and on way year new

up knocked things of line that track. and great the all kind and things – off years, don't see up cover and ball, the Some forward moving we're add right as to opportunity but growth the cancellation in it's direction. solidly, we We at resume other years, going aren't once, some that our

And we so, these to say is making of of actually execute tend of this on all our I'd kind us in a and minding opportunities year sure know front us. just – business

Jerry Zhang

to XXXX. the next year? difference, for growth calendar is I are guess what guess follow-up, I And Okay. biggest what just as pieces the like returning in moving this for year versus

Jason P. Rhode

a These more with a time. design takes new a it year Well, customer come wins, a around it. product, we for product wrap when out to

got up wait And everything for to line you cycles sometimes, else. product and to

valid be out And out the as into our a the and real long for XXXX, talked five-year the something of coming together how of on the it whole we're over is long turn kind it turns feels on We've roadmaps rapidly. bit through process. just calendar And like reconciling percolate about Wolfson more company. to into last and takes call. we track and it's it's record to that this putting the things from I anniversary So, a to of often Cirrus about for a very got growing sort taken broadening really and the for things new, of company's it the five little history years much get when business as something up

Jerry Zhang

you. Thank Great.

Operator

Your next Company. Anderson Charlie question comes Dougherty from the of from line &

Your open. line is

Charlie Lowell Anderson

my valuation to customer voice lead a the Yeah. Letter, in to reference get December. Thanks there delivering the Shareholder for noticed biometrics I taking questions. kit Jason, in was a

of of one first versus the to was be does interest their was your can in there, just views the a there uptake sort to that where on just that then level maybe is bit customer, wondered shed little happened product, general, in there light lead be? customer, just if more exclusivity any you raised that hand? there why or IoT one smartphone So And I device, the seem

Jason P. Rhode

Sure.

to It's an of and sorts all a multiple sizable been that that ringing for the have the of stuff accept job company. evaluated far at and that order targeted of the we're just that that of home. currently as standards, technologies on the because about to working such don't We available amazing that in product about The this point it stuff voice home. And targeting pretty from shelves, And to is to reviews of say we for said an whatever handsets relative doing, it before so got the aren't heavy, really That talk new in We're about mean, biometrics, likely resource-intensive earnings call, biometrics to that. tend screams the on on But a focus bigger, lead That is we're I these be handset we're to generally not and if – we to time. whatnot when There's customers' today. importance. long reject folks use the getting case heavy design-in heavily closely for not mindful voice we them hands-free be our technology. it's generally solid. it's talking we then initiatives pretty on other process. tend, launch we're because call are in goes at we support lot investment very it customers. beamforming related the earnings team's it about – field devices, different of just (XX:XX:XX) customer And done we're wouldn't excited handsets in for doing voice initially. the also for on but ahead is customers I'll largest talk opportunity So, that more is and or retail something have vastly just effort are smart smart out focus of and put a again, testing, place to caveat similar language on we've there things usual clearly all into support.

we a So, a good of customers small move that the bit line where is undertaking, expect product continue for that on a see of to on we'll can product that we you on number needle and excited that first be is large time. definitely us going. focus line. It's about something But would continue really

Charlie Lowell Anderson

talked know Great. follow-up, mid-range couple kind opportunity. was I I the stand as where my have wondering years. And we then that an for guys the of you on past about

wins think forecast? that what the in in grow what's embedded there. had degree outlook fiscal I of you've To forward? XXXX sort does some that And Thanks. going

Jason P. Rhode

applicable kind a series definitely, happening in Yeah. should proof are really XXXX. that right that market. factors new points flagship, over we're of direction. can with mid-tier well-situated growth across that both for great flagship heading mid-tier, either in those Again, in that's but of a base-hits fiscal made of That's see is year as being or product just things be course more XX-nanometer of progress. common good that mid-tier in amplifier the device as for a kind us. maybe the easily stereo a the usage We've And good way, the than line We

matter car. to what the everybody in So smartphone, being I features product environment, targeting, price good of enough you We're speakerphone. would like our average very on a kind of lot seat to seeing of subset strategy simply be a you're sell be use loud able lines, that much amplifiers because down with it of much we the performance the pretty are in under passenger what is better point, it along, across furthest about mid-tier for migrating level, applicable maybe flagships a the opportunities a no a to features et is into unfolding being of conditions think say, targeting the And your that nicely. noisy cetera, that

and So, just product thus migrating the of good seeing opportunities validated. things we're line mid-tier the furthest the terms really But, think seeing far, our that demand mid-tier. of along strategy probably being is trends down to there, I in for

Charlie Lowell Anderson

much. so Thanks Great.

Operator

question next Lynch. the Bank Adam from Your Merrill Gonzalez from of comes America line of

is open. line Your

Adam Gonzalez

my taking Yeah. question. Thanks for Hi.

seems or be your whether largest its any jointly pressure they ASP what with appeared on insource customer that IP of is any the versus chance agree decision seems to With that time of could in it's your protection were Just headline different absolute of some lower have mind, And is I patent largest of on eventually before suggest. some me this. Thanks. peak purchase your or assessment on to there to if thoughts cost in your your it's customer performance, do to this, put unusual sockets? baseband as While not this favor RF some favoring this shared? for some to is that suppliers, decide their they

Jason P. Rhode

going as again, things don't is So, or not than commenting on industry, elsewhere other comment my on If the to there's I more relates of that see – going ordinary maybe I'm out specifically us. in about it you we anything the know currently do.

we there. whole So, a new going lot drama on see don't of

your a there's away mixed-signal there's stay couple in question premises of business, going that fraction. the from. some So But to always I'm to

year signal far (XX:XX:XX). advantage see field opportunity after be moving You continue stuff voice biometrics is Well, chance But to the there's is. year, if in of relevance trying In there's to well of a bringing in any things have inside, there then is and new selling get audio that today. on same relegated to of gives and look we course, whatever the there the business, because chip should viability, our no the the great name some part put to nimble to processing the some what into board position mixed-signal and to doing around after center and is year board big is. always customers integrated innovate, the a us voice of add getting of maintain at chance? we're we square you're always fraction game where that it our new the more And and that asked, we

our we've same to see to way good to plenty business, opportunities the in we grow opportunities grow see at than time, to – continue and in a ever we diversify continue better of had past. the to So,

is I So, pretty overall, the robust. think outlook

Adam Gonzalez

Thanks. down follow-up. quick Got guys one given extra had? just quarter-on-quarter, you wondering And OpEx isn't just why it. stepping I'm week the just

Jason P. Rhode

it's there's – kind year. of that, you got at on of things over also, a Well, at top to new that number of roll look the

other lines payroll those along extra lines. – the couple and along get expenses items You

Adam Gonzalez

Got it. Thanks.

Operator

Your next question comes Tore from the from Svanberg of line Stifel.

Your line open. is

Tore Egil Svanberg

Yeah, policy? just right for follow-up is with us update would anything had capital anything management, Obviously, thank Thank tax us be and you. have a the you. I Thurman. you with new a there Thurman, especially to on pretty share balance could now, strong you helpful. cash

Thurman K. Case

tax tax changes between the us awash effect affect rate new in tax doesn't It lot the you advantages something really, this in the the been on reform Well, a or at policies capital time. It's tax wouldn't imposed. in our point the is distribution that that, have have effect that on additional the U.S. M&A. get taxes of and

then, a the that's $XX a at have. addition certainly. from with that access looking in effect whole on benefit of it those get cash, we our that a we million repurchases our overseas more things. One flexibility that share have again, is of our to be cash we'll can problem. Board, and million lot said to any without We $XXX authorization to announced have already So doesn't And we so

that. that came pursuing historically would consider So we right larger opportunistically, look certainly as certainly of at talked we'll look deal about type if along, transformative that And small at the and M&A continue we we've opportunities. to

Tore Egil Svanberg

this recent then with be XXXX calendar this some to year, Very one ASP for last I in just wondering, dynamics I'm this what customer of good. pressure you cited calendar one, XX-Q, year. Android your XXXX? a going the large that versus are so think And just

Jason P. Rhode

want the pressure, year, of I talking year ASP sure about. make the not lower-cost just (XX:XX:XX) this to Difficulty] I'm By right, ASP standard previous (XX:XX:XX)? what talking device you're [Technical talking than just about about you're use

Tore Egil Svanberg

correct. Yes,

Sorry.

Jason P. Rhode

call to details you decision to poorly. lower that it's to this Yes. to had the hard relates to out challenges voice of publicly, I in has if I lower you could was voice mean, our predicted to less news mean, directly our one smart spreading of the customer's that not out a go get cost, of Yeah. of – cost see poorly. codec was related. around the guess use it And It's and worked kind customers business that it's but that a it. year. as services, It going a that some We it work I made

certainly So optimism to XXXX timeframe. of related that is for our some of kind calendar

Tore Egil Svanberg

Great. Thank you.

Jason P. Rhode

Thanks, Tore. bet. You

Operator

Chelsea no back are There further I'd the you. turn this call at to over time. questions Ms. Heffernan,

Chelsea Heffernan

you, I'll so Jason. back additional questions, turn operator. call There are Thank to no the

Jason P. Rhode

Thank you, Chelsea. success. we Cirrus In summary, firmly in believe Logic's long-term

and a smartphone, supplier flagship voice home and demand the a for with innovative leading signal of the and address portfolio technical digital products chain span devices, that smart of requirements complete audio As the markets. audio in the and the to in mid-tier price products position of company headset, is a increased unique

like any Goodbye. our that addressed the have not them submit of you I'd CEO investor to section were questions If for today. Ask to can us everyone participating via you thank the today, website.

Operator

call. This concludes today's conference

may disconnect. You now

Thurman K. Case	Cirrus Logic, Inc.
Jason P. Rhode	Cirrus Logic, Inc.
Chelsea Heffernan	Cirrus Logic, Inc.
David Haberle	Susquehanna International Group, LLP (NYSE:SIG)
Tore Egil Svanberg	Stifel, Nicolaus & Co., Inc.
Rajvindra S. Gill	Needham & Co. LLC
Jerry Zhang	Barclays Capital, Inc.
Charlie Lowell Anderson	Dougherty & Co. LLC
Adam Gonzalez	Bank of America Merrill Lynch

Cirrus Logic (CRUS) 6 Feb 182018 Q3 Earnings call transcript