CRUS - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic first fiscal year 2019 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 over I to conference now to Mr. Financial Thurman Chief Officer. Case, Mr. Case, you may begin.

Thurman K. Case

good and you, Thank afternoon.

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

like I'd call the Jason. to to over turn Now,

Jason P. Rhode

Thank Thurman. you,

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

account Letter Logic's results, detailed FY end $XXX.X earnings and share our our above Shareholder a financial loss Cirrus was XXXX per website. million, GAAP share Investor $X.XX, guidance. revenue per read high please the the QX non-GAAP was $X.XX. was of of on For posted Relations

During the the gain quarter, execute future our momentum Android headset products smartphones to utilize on wireless company OEMs the growth. for as believe launched in initiatives in company we continue technology. our several across continued Designing QX. position to that and devices the will we was And activity robust that portfolio new strategic

end as expanding products over as We expect next existing months, the more to well mobile with business customers OEMs. leading market new, come adding to our XX

demand the accessories smartphones, and We home. connected in accelerating mobile user-experience-driven the including features devices are encouraged advanced for to markets, mid-tier flagship target our across see and

intent, return ability including requirements, as diversified range portfolio innovative a Logic's opportunities, all As an well to make and battery more which capitalize that processing. performance these with to including improvement audio part environment regard into our of increasing and of expects product for of analog, OEMs have to features, to and a signal pushing the contribute devices signal, of will core the consumers devices of and continuous intelligence, play growth mixed haptics, power company's and users' security, addresses of well This become is integral complex life. new competencies as demand continued cost our we aware expect and XXXX. daily to add solutions extremely believe all performance, Cirrus which adjacent low continue With FY to wide lives, in success, company to on the voice

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

Operator

comes question from first with Matt Your Ramsay Cowen.

Your line is open.

Matthew D. Ramsay

about to you customer mean about I in of through et you bit revenue your obviously follow-up. some parts a to lot disclosed, sort Good a kind of moving afternoon. there's of of this this maybe guys guys parts. Thank you Thank than the had what chain, talk you I a Jason, three quarter you. the moving but were could But could little you. the us guidance upside could go And the bit percentage transitional – with drove quarter, differently walk supply through months a in little cetera, obviously – if maybe have Apple the there of in then period time went you the expected bit and a of just talk this maybe you around with little largest what year. ago

Jason P. Rhode

of mean, I drives kind our of out Well, at day, the is end of the in control. demand what

we're building us to honestly, the put we're best what then at is we we of – kind products the we get slant and how And on so we for best in conservative interpret pretty think question that the and forecasting And in just is cases. end do in a our demand customers forecasts. it. we can frankly, tricky ahead. and determined, challenging, our information, shipping quarter, any customers given up and since their good of give do or most do their best do beginning our it's and I of a long many But

So in it's a of quarters. a lot challenge

the of of think we up on or even what shipping will back upper the in absolute our end kind than guidance it's The You at what really the might think, end ratio you quarter very potentially dollars near with that reality okay, could based in just is we – we or of it end well, end to backlog, into result. just come we the often historical and be have to that even more range, case trends. the to

really parts to So We of conservative. there's moving a lot to be try it.

or – it try than beat of to we – of at charted XX case way upper up Most ideally to don't of more within to are the in the is the miss. of last I up – last we just be quarter. the we don't have natural a taking. well, know, very what range, given to past recently about usually It's – If dynamics we good you the somewhere quarter end week any the of people range. beat end in We XX% we the flows, more within up the due the of perfect But quarter also supports probably conservative. visibility charted pretty than in history, business the XX% the time far so, often the that quarters' we're worth going look and mid

to And a It models, of timing to anything so can doesn't a have orders financial business, in have can the with or customer swing it or the movement in your from a perspective health significantly. pretty particular. pretty move company any expectations it relates from as do significant but our

in. more but is, to end not day, So the net had sort expected the going think a (XX:XX) I of sold we hesitate people of guess, than I what stuff little – say the at I this

Matthew D. Ramsay

(XX:XX)

Jason P. Rhode

year around a obviously last year. first demand some helpful indicates of end and that's that terms calendar had in of this in part think challenges kind the – we some of indication our And of we've the because the of from that I customers

And so of picking seen indicate that back things to the (XX:XX). that we've up that seems trough

Matthew D. Ramsay

Got it. Got helpful. That's it.

I – the sort long on obviously now. merger And some period happen that time. months guys related would there, progress now. broad a of the product how of as how amp XX I on got, been Obviously, And that large that, I don't the and about you competitor update momentum a noted the how and questions the going amp be. in business. a Just that's Android your – an a we it's follow-up, Shareholder of guess not that quickly what codec with are competitor XX, happen can Letter I sort merging fact to Qualcomm-NXP And the be traction unrelated customer or nanometer of world. shipping sort to the going know, the of of – mean, and ago that XX didn't ramp in into the parts I can question for now affect guess large

context So the you. amplifier comments that to just business there and seems off. Thank any taking to be

Jason P. Rhode

with the amp category that the to this The variants cover a extraordinary mean, targeted it's for it first XX-nanometer be to of pretty to ecosystem, to team, our really product and audio in And product, pretty so that of that Sure. in, of where particular targeted customers. accustomed the just Android level at Yeah. device, teams both kind premise two same design product, and we're they've ball. it directly we've done the well off I knocking engineering the of haptic. device easy it's that the

to we've of both product the did what business our amplifiers And I deploy than great folks as because development integrated say, So, DSP. the previous anticipating as marketing it's broadly just and much team more as the then some an had relative you customers referenced right has the architecture had easy the well a the of uncertain job slide on right And market circus in when position the have certainly to doors in was also we of going exact open (XX:XX) to to to with. part our need. the flying that (XX:XX)

out very list part there already having who's – – we conversations as shipping important think devices the in with already can the we about excited that broadly. great mid-tier showing care so in opportunities So China that part. well, there's teardowns very for that very We've about. We're we support who

hobble themselves competitive themselves the tying they've on-again our to to regardless. we've a managed going good race, need M&A that's no entertaining the by and that'll good relates by competition competitors we world, the always it think a when got to strategy (XX:XX). survive successful themselves – It in tie three-legged helps matter As strategy together we but landscape how the be off-again

Operator

Dougherty comes Company. next with & question Your Charlie Anderson from

Your line is open.

Charlie Lowell Anderson

if you're there.. got also know to I talking And wonder fiscal that had then Thanks you commentary just talked And just about if quantitative I've any growth, growth a wonder you more want congrats and there's I Yeah. year. last decline the guys I my for Jason, about results. any there's to on quarter the follow-up. if I in XXXX. know any strong commentary a additional for that update XX% taking beyond number. question add

Jason P. Rhode

mean, I of either not Sure. one. update an much on

to be people were is providing off formal polarity guide but into year, it in of this And we what from and our at Our everybody's general related where coming to practice it things. away models that possible the as and looking for quarter. would really magnitude were, very the was to expectations like year both guidance stay fiscal

we want when that don't provide than they're sense we to So that better – off, direction good to want pretty a we far going be that. have

So error should range like, fact some hopefully, where we understand we do giving that circumstances that something implies in give that like bars be XX%, for pretty we're there large the that people minus a directional the have timeframe. around expectations that say, not

us still impact our the that an does disconnect We is that order. year, of frequently or So, the the which second we very come and don't think on are course, given is (XX:XX). down. fiscal degrees have have dominated, the largest any don't up our of our there's of see half outlook at by of fiscal that really change customers relative and of in that. update year, success end to The all ones This can even an

just in is whenever encourage their uncertainty front financial of our this that investors models outlook. we around to making in assumptions be us, given they're conservative So,

success it as – on customer down in pin all year success other difficult with the the geopolitical control. and so that is and various and customers it's where also a trade on with we customers. hand, terms expect wars it little existing Again, a content hinges additional FY we of new number. a to XXXX, can't do far entertainment And other as But that's gains

optimistic on basis, a like-for-like timeframe. remain So our growth that about we outlook in

(XX:XX). hopefully, helps So put that a

Operator

from with question Tore Svanberg comes Stifel. next Your

open. is line Your

Tore Egil Svanberg

you. Thank Yes.

or maybe than ever mean, this in to will emphasizing you of over haptics Can you Jason, buttons, be you time are much of two there? what talk opportunity less about before. type world multiple we a there more haptics? be one about opportunities bit little talking with have So sort for do seem or I

Jason P. Rhode

good to the job applications and both well we're grow to the business. right your new audio and way great respect same it's we're of taking financially in, for just Sure. really It's some at application which is as reuse us ways an team already technology a mean, to amplifiers existing Yeah. finding in great I philosophically. as by with box the that that shipping new already a technology exciting

the textbook of executing So some it's marketing. team by a job nice

often for not the first look motor. of that in makes market want to versus relates right achieve – take and the where crisp, lot device community to does add was that more of that cases very absolutely a everybody of a – and see buttons it's recently, feel really buzzy it by play a with it Android for us and to in we've low motors. a that's due handset As to the direction. to them And gimmicky bullish, had. cost comes pretty enable handsets, the And physical of buttons. XX-year-old space long, are move latency, been had this that being and surprised time There varieties marks technology using with people them, of very really focused seems I the on we've that to and Android reasons have a lack I level those of I synthetic button reliability We mean buttons to your press, any of number point, on traditional removing to screen certainly removing they're when buzzy space that that having goodness a and vibration in because with kind I vibration not is mechanical

run, one compelling having a it's one of create than really point, folks trying think add in massively a the compelling, the but having there experience product, more are haptic expense, for sense in experience. a little to makes more have a we that proper there. other So does to It really if to premium in engine you're then a long your to make trying tactile and bit

Tore Egil Svanberg

I follow-up, mobile noticed the my as word also advanced chose And good. you Very accessories.

wireless try seems that. something want headsets call just mean you you Just you when them to it. it headsets, I understand like mean, and but and more obviously, more by to advanced, have there's what

little Thanks. So if that, that'd on you great. bit be a could elaborate

Jason P. Rhode

to then a a via of people you the that relevant it's Sure. I we been when for, constraints applications you've wireless or products pack, headset and is designed digital other end and relatively nowhere allow intended as we headset our amazed well of level out, come where as more are cost, other access that mean, headset kind including by offer And with a different going that's enable been a without with in than the be things that power low that either never we neat been the a the to got DSP to remove to that'll, to as in power intend. one, pretty the high people with stuff that the ship. along and USB-C completely that volume wired going our that gesture are And we're really comes to didn't battery. out a there's And with capability for can true of products try use constrained of device they're where in always be ways used fitness market. as full And I the way – amount analog that various ANC-specific necessarily other space, we amplifiers applications headsets we that are really cease lot or that a – end our and a relevant. down it's battery ultimately with It's then cost recognition the passive or can options. people constraint that that think in

also it addition takes cancellation, applications, in we noise headset those think it. innovation to in the For but just

kind So, I that's (XX:XX). think

Operator

comes Barclays. Blayne question from Curtis Your with next

line open. Your is

Blayne Curtis

for my Hey, question. taking Thanks guys.

a Just here. couple

you think guidance, first XX%. year revenue the down the it's have about flat if fiscal And at look the have the to I you lowest back ever. second XX%, up. then is to minus half, going half to Android to to Just get

math I you think trying I'm also the minus a why largest And which So, as in XX% Shareholder headwind be and you I Letter, mentioned well, help in it of would what is a that understand I'm that's if just XX% older to with the headwind. headset missing called me revenue the this as math. just you number? revenue customer right Can think with

Jason P. Rhode

Well, okay.

XX% inclusive, you not we're the offering year. previous So, as commentary

You part tail when XX% current we've you end thing. of what of that's We're we're content said some expect giving we that reasonable the of year, can fiscal a there that error towards comes where do like. customers It's guidance it we We possibility. the around gave from. so We existing are decent with still quarter. model certainly But directional you saying. particularly however bars was is the gains think that. realm the in –

to speaking widely already been comment, I As to headset pretty something rumored. largely relates the is think it that that's

think just in the is incorporated with outlook I you're current familiar just provided. that we to acknowledge that wanted – one, quarter in that we that

Blayne Curtis

Thanks. been And ANC headsets. in capabilities that's else wireless something then just – your rumored putting actually, is

if wondering had you lot just I material know in if you volumes, you bigger already, some here. any comment there. of getting I guess there's Thanks. on. Just wireless of curious a speculation had Obviously, can anything of but updates terms

Jason P. Rhode

Sure. shipping in the – increasing see and number there. mean, to that we today, grow devices an good amount continue opportunity Yeah. are of Bluetooth the I to we're increasing headsets, things we're of

circulating I know are. those or or think ago a the blog week I wonder whatever what I things the of was origin that was so it that always

great timeframe was seemed that where in that not I in a to report But they be are from shipping been in were are headset of XXXX XXXX. the FY the what away factors made mark. make or that is That that off far we're the from. new existing about not details put form on up factors. particular in one, no by pretty magnitude that both that idea we've our seems fine the that We things form right. to why details lot The is we a with customers. of doesn't out on excited have expect There fact part rumor before. we gains fiscal of that gains to around opportunity where came ship see type, XXXX and the point driven take FY So content meaningful the excitement But to of hopefully, there

Operator

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

line is Your open.

Adam Gonzalez

taking Hi. my Thanks question. for

conservative near little a being the you're like sounds it on in OpEx So term.

Just wanted near top term, way perhaps fiscal term reduced the in XXXX. meaningful about to in if pick to what's in reduction up a signals know think longer and that good confidence line a Thanks. growth

Jason P. Rhode

be No. I to was always R&D thing That's the acquired by intangibles. driven it's actual GAAP that letters down. what spending you (XX:XX). which think difficult read be but written, when flattish. and kind was lumpy trying of we're through you I how on mean, be we and compliant, telegraphing largely that will remainder OpEx amortization flattish we quarters, to Obviously, paragraph intended these to were The sort it's very G Reg you it write as but people of carefully, of tell of is it's if that move

are careful We just very that. We're still being hiring. about

doesn't well. is we're scale helpful plan that when we're that so that of very regard. variable – is a And one this it kind out pay where our in and like not years where to Our not we're OpEx like ability has well-designed natural growing, compensation having

a manage forward. we are but growth we're more company tight, look investing very think where things going long all lot in we'll the foremost, the at areas we first for term whenever and and carefully our So, heavily drive the you'd expenses,

I way. it So, that not yeah, would interpret

Adam Gonzalez

clarification. biometrics revenues? just thanks see to for material can voice we design update on when any win to some And follow-up perhaps time initiative, it. just and the start Thanks. first And then Got the there, a

Jason P. Rhode

strategy. I growth mean of still out that's ones the Yeah. further But is compelling. that's it one incredibly on our

process that to will. challenges of about We that fingerprint of continue the via evaluation that would Working if to customer just the do make which the There's we with complex lots things customers. progress about grade a of definitely achieve you through and then on it. demonstrated what. We've it security are voiceprint, like can

a something still at things real or in around it's wouldn't that a able It's it's so, into of of a you're give all to company these So in that out it one you a pivotal the voice instead moving. ways but No XX that I can a or financial a real next toy. like further. interfaces that excited your ourselves there the months are company, comfortable becoming Until at elaborate real in that soon access still as financial then think prevalent little tool to this your – to models it voice institution time. any turn it's so of as build tool. And assistant we're able projections opinion a about we're being absolutely my kind that, becomes do just email, of read and it's to it's you're powerful novelty. the most we up real

strategy connected-home-type amount are the think a lot the for So type from in of that's those the of increasingly what The for driven device, nicely. in our to services. out dovetails it's do in Shareholder beamforming is low applications lots there enable. the very or something always these the what handsets increased things. talks Letter increasingly like computing, about as and is cloud from of microphones cloud. section There's beaming some That that portion us applications processing creates all just set an of that we're cloud both voice-type customers call far-field technology the of Intelligent and perspective whether Edge, to and voice It combination in prevalence something local the that application and that need off data middle on, type as a of as real outside of we enabled driven in is incredible of to the to opportunities There's by that complicated for power or by we interest well. which actually the it something a trying of of and handset biometric

key still voice our biometric. anyway, them, all of about voice, opportunities very in excited So, among really

Operator

question comes International. Christopher Rolland with from Susquehanna next The

open. line Your is

Christopher Rolland

for Back around you or guys could do for speakers bigger compare? Thanks million the again think the that speakers Thanks. haptic amps? driver Do and amps that drivers Hey, And haptics a be stereo your Is And guys. $XXX question. you I you TAM? XX-nanometer a be to expect how haptics. for right? optimism said to

Jason P. Rhode

see. Let's

then handicap don't stereo us. nature. know if the how That I to stereo opportunities increasing the of you're between of the audio that that of an in XX-nanometer and processing versus race our both we're So, opportunities to obviously the haptic together are in for signal strengths put well because even part, They're We going see them for terms targeting of big way not percentage amp. actually actually plays the the two to created solution because more. also costs as And area down, as the inside forth. and the amplifiers blowing the that's we've power nice and two up brown-out the speaker also helps matter play battery incorporated of then so

concerned, But don't market stereo of that's And relates space. percentage multiply in for that, the for the to going whole that's what our when It's with. number by, market. to the up you be us I add It's as opportunities of $X.XX. you is to say, Android end as forward. part the the as increasing it know to So, you far going kind haptics opportunity market of incremental large all a willing money spend the ever get

million somewhere $XXX large thereabouts, (XX:XX). it's it's relative whether or the to And clearly so

Christopher Rolland

Great.

the if right revenue doing customer year-over-year. math from down XX% Okay. your is non-biggest I'm And then

you So, as that as year-over-year, Thanks. then we going for what accounts for look camp? kind of well? And drop what's the in well

Jason P. Rhode

of I where codecs the new challenges time. of is which product roadmap the Well, that, increasingly We're the that an manufacturers, frankly, Outside a That's second shipping now in yeah, our I customer. obviously up non-largest top the handset in is, line, our got with on. news, We're is some in actually three of well teardowns. we're quite that's And customer, largest a full account relevant turning space. part that we're think doing spending amplifier of all three going large smart think. with more Android

that. So, we're extremely about excited

every think agree good that's headed. we're a sign probably where would real for I marketing textbook

really numbers challenging given of So some in out I it fold. stuff behind that, X on to but comes of understand our become the other where the working break having more next it'll success is XX to to kind we're we we're the months Android the think the story clear way over as

Christopher Rolland

Jason. Thanks, Great.

Jason P. Rhode

Yeah.

You bet.

Operator

further turn are time. the at I There questions Heffernan. from back the to phone no Chelsea this call

Chelsea Heffernan

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

Jason P. Rhode

Okay. our product Thank and you, our components. capitalizing of Chelsea. with focused we and momentum compelling the for audio base, increasing remain pleased quarter, voice on our In execution this customer expanding past summary, are we and on demand roadmap,

in addition, contribute investor.cirrus.com. will our continued developing requirements, KeyBanc in opportunity the at on address In add of Conference we success. and on of the I August Vail company that the new Oppenheimer broader to to at that webcasts X dedicated presenting would available Boston portfolio be believe which is a years, we will August also products will these be Conference Live events and coming note incremental content over the XX.

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

Operator

This concludes today's conference.

may now You disconnect.

Cirrus Logic (CRUS) 1 Aug 182019 Q1 Earnings call transcript