CRUS - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic First Quarter Fiscal Year 2020 Financial Results Q&A session. At this time all participants are in a listen-only mode. After a brief statement, we will open 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

may would the Financial Case, you turn like Officer. over Case, I to Thurman call now to Mr. Mr. begin. Chief

Thurman Case

you, good Thank and afternoon.

is call Officer; X:XX fiscal Today, year first Executive Heffernan, we today's on our Chelsea Eastern. me Jason Cirrus results and and Investor Logic's of Director approximately quarter financial XXXX PM Rhode, our announced at Chief President Relations. the Joining for

all including with available release, reconciliation financial to e-mail at directly the are results, of This our financial Shareholder to from analysts investor.cirrus.com. of this on The covering investor.relations@cirrus.com. discussing our us information at press via well non-GAAP letter our the submitted Investor comparable website company will earnings GAAP questions the questions Q&A Relations a call the most information, along feature webcast as company's as

uncertainties filings materially of which statements additional no refer results results from with or of other Please press subject for to actual whether By corporate developments that website, or otherwise. the differ Please update to note statements on projections Commission the release is issued Securities undertakes from factors Exchange discussions the the Form made information, current make that the providing and any well revise or result could and XX-K other as to as today, to may latest forward-looking as available may projections. during and and Logic Cirrus risk cause this new expectations. session, and XX-Q the are that differ a we materially that company cause obligation forward-looking this risks projections to actual

call turn over to Jason. the I'll Now

Jason Rhode

Thurman. you, Thank

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

Investor our a financial read our Shareholder account detailed of letter website. posted on results, Relations the For please

of high our Cirrus sales success launched earnings revenue part to respectively. at FY the guidance share the and QX that non-GAAP 'XX QX FY of of were and components. per utilize and delivered $X.XX due 'XX end in million GAAP $XXX.X of recently $X.XX, Logic products

company the product momentum quarter, and design the to our across existing continued strong portfolio. experience new During with customers

be with top XX and XX the incorporating to the delighted our be smartphone months. seven shipping out over incorporated solutions are devices more next We to expect OEMs of

company can on voice long-term in leverage low-latency Moving forward, the where delivering audio, markets through innovative we signal in investments expertise focused other remains growth our targeting adjacent and processing. products low-power,

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

Operator, we're take questions. now to ready

Operator

from Instructions] [Operator of Svanberg Your question first with Tore Stifel. line comes the

Tore Svanberg

congratulations and the results. you, on Thank Yes.

First little reference is that shareholder to this much your question, your on customers all you at Jason that I something could made hoping bit in new just and smart point? was elaborate letter. a a shipping product particular you're you codec pretty this to

Jason Rhode

- No, question. no for that's thanks the

Now let's product. targeted custom

broad So, market not a now, it's device.

Tore Svanberg

of good. up tends is the be a is going mix, gross seasonally, up. sequentially, And second you're your percentage my surprise obviously, guiding margin smartphone be higher margin Very gross to some the question to

benefits Could bit starting you it is as of or controls are on to little maybe your own more you elaborate of well. what's see a going cost there, actually some price

Jason Rhode

moving costs. parts mix to certainly This it. There product is bunch is own a to contain efforts our of

the we're high of taken our from in as that not at we current be we we're so for guiding margin obviously a be quarter. a that way growing that, could think lower of model margins - perspective, would supportive outlook that revenue our with So conceivably pleased certainly certainly works as what than

a -- the more that's great efficient from our well. products, making work of think a their and doing as folks designing lot bunch jobs to of well a other great we as supply from chain But new results teams testament folks

So with we it go quarter-by-quarter was and from take as kind there. it of the result yeah, pleased

Operator

Your next question comes from the line Rolland with of Christopher SIG.

Christopher Rolland

congrats the guidance. guys, results and on Hey, strong

Jason Rhode

Thanks. Hi, Chris.

Christopher Rolland

the maybe in you and codecs a mention headset around more continually presentation of adaptive color Audio, functions, here, looking bit for just little bunch different USB DSP, see, mentioned Let's DACs. Hi-Fi you ANC a

So those? going some there eliminated we think shipping that all in you're are be Or the that to that from are those codecs are functions to soon?

Jason Rhode

be of great up a it that speculation too, a question. That's to source there. because does I appreciate seem common

providing types it's clarify all we good noise mean, codecs so the to so just USB-C canceling. to value necessarily have board to we're across in what we headsets, them type So that of the be that not intended highlight support able is of

that more type support headset headset have USB-C basic functionality. digital functionality, codecs We

smart quarter devices. about last chasing that were bulk supply are in the expect have bud good happen shipping We wireless been throughout today, a that particular to wireless, things this that that's or what of excited that launched and call truly devices spring win those earbud, really continue popular we codecs design we've were we to launched type with been

we're at the form in factor. additional codecs, cases, in some we're that microphones, again, we every case least need noise canceling wireless - USB, content very - excited provide, we can codec amplifiers, So, and then you a can have about you somewhere need

been the in steady we products that's got our is drumbeats new historically. that participation kind of of think We in haven't that one we've

I additional this the as So untethered we shareholder later wireless expect think earbuds referred very to an popular letter in fall. be we to

out of most that we will puts their of popular So us about couple type and put that we're expect most in a that, us excited products there. that the very

So we're about that. excited

is generally so since noise ANC solution, don't other likely folks, but we provide there these there pops a fine. be up can given not again cancellation of the type it would just high license devices. not at clear, than is speaking kind is lower very content performance, so in to and ANC targeted We battery of buds that that is performance-type high noise other ANC certainly constraint, isn't interest that's that kind now environments, be canceling there in necessarily, the untethered typically So, products it our to our

to gain There's to content ones sockets codecs, on definitely product in cusp some other Take wired amplifiers, we than USB-C a happening. of of thought, longer things for it's microphones opportunities lines. these types stuff, or would good whether of we're the but so the in case develop us it's maybe have the good

Christopher Rolland

processing Understood. smart seems presentation, win. and different on And billion home mentioned or you that the that edge congrats like wearables. XXXX, it other in from was $X.X autos in or In

we're end be your about talking or to products? wanted either comprises what clear there, markets that or what Just devices end

Jason Rhode

just power I processing sort of low mean, implies want the so device. - processing the at ultra edge low we signal do name heavy is powers, end in ultra Well, to ultra, duty Sure. that

rather could that than competing for some be example implemented So cloud. in solutions the

on different not are really Voice in so that of somewhere, today biometrics done and voice. But with is server kind are grade call of the a your we're market they what for there solutions heavy so via the cloud that's, that's that's the that, centers forth done where functions, good targeting. signal example identify you processing

things. able on battery of being do always functions devices, other ultra-low power, We're and enabled handsets types targeting on these to

biometric of embedded or could or voice other that audio are enhancements applications voice speech kinds that. certainly So like be in recognition --

manner low it puts power, the of all latency, thing in it's done that wheelhouse. kind signal So of low processing our is locally that

big it's but that -- the I handful end So mean, we're as of well. we really the of today, a over expansion no next market see years of

Operator

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

Charlie Anderson

on the and congrats thanks taking traction. for win design the results questions my Yeah, some of in

Jason Rhode

Thanks, Charlie.

Charlie Anderson

question, Jason, we a the in Wanted guide address And to just the year? picture think about maybe just big any start how sort then on the just thoughts you I I've formally, qualitative should got know with year. maybe follow-up. but of don't

Jason Rhode

Sure.

I dongle, of the we're the news So, kind inclusion thereof. lack we're much where getting lapping comps, mean, or discussed though good year-over-year through

that's a Obviously, and from launched. new being we don't when is they who insights perspective, have that's are about going and up turn good. So handsets what to buy year-over-year

that that's difficult quantitative to So makes in us it guidance what for regard. provide

about our time amplifiers we good But continue our on untethered business question to haptics, as talked mentioned to our things expand pretty pretty growth We perspective, increasingly, opportunities audio, drumbeat. we goes so think on from in qualitative steady see about previous continued is I there as earbud devices. with a excited a and we're type

that's So exciting.

tablets, meaningful. hasn't We're is we've poised There participation in business of which of for a form time. factor, our had a significant in grow to been a lot amount

share So to that's take a we pretty meaningful there. that expected

devices out longer grow for about the -- we feeling that in expect had type a and got good that. very a we've devices continue term in, the but to some market wearable horizon we've come on participation there seeing we've that that's been and to while other Now,

too with, don't who engaged of but our previously for suffice year some of products our this around previously now record just from longer detail, much timeframe. we've not high for opportunities of kind content because we'll of we we're and volume roughly plans the into of of not addressed for functions handset nature opportunity in term that and to a we say provided Expectations wearables then kind get the have

devices some of matter So we care see volumes about increased and that for content drumbeat customers. all people of the best in clearly of and the a are steady driving world's

this means So we're what that pretty excited qualitatively environment. in again about

the where many people what really is story and to about good. turn it's for qualitatively how think best to not us I be but guessing up going buy handset, are

Charlie Anderson

Great. capability. there, good with up named you've the that customer like market And is then, the and my letters there adjacent mentioned now you have there's shareholder several for follow for product interest

would But more of this I is, custom merchant this product of guess a curious product a what type would customer by Thanks. area. would then be a be I or be

Jason Rhode

the - tend things are market. we talk about that for I the to mean, Well we broad

little this very We of would are ahead about we keys a far I cagey to we but I say, no not we're closed-loop to a it is, get case helpfully little controller. referring a less referred you're guess, matter more as our what what in too those, to try -

we be audio with follow speaker they embedded became look amplifier. monitoring we in a and the for quite us which similar us. processing deploy started being which interesting the protection current of enhancement voltage in a of could to to lot is at else Once amplifiers, do functions types amplifier to, to to kind just that It's signal where audio that, to which to involved led with really the on opportunity, other haptic delivered and led the of started

stuff, we're addressing within low referring controller, to that closed-loop further what again So applications types sell but is that power, signal other devices of low some as processing, the highest-volume technology very this into. we for of - new were latency

that over now a in timeframe. little a a see And good expect we kind to year so, year, content of it's roughly the from of kind

of ahead into what is they So that when obviously not, of we get what details launch and in. don't

Operator

question comes next Matt line Your of & with Company. Cowen Ramsay from the

Ethan Potasnick

Yeah. Ramsay. Hi, is on little the a a ago, picture, XX% for a guys Matt on big third expecting you I there. was while while plus Congrats were back just This quarter. Ethan customer. Potasnick little wondering

wondering who and I with that if kind could was corresponding look the what components is shipped to certain discuss and regarding up like? picture be you how given trade-related to of permitted uncertainty guys shaping dynamics are

Jason Rhode

Sure.

So targeting. we were

all as drama I recently quarter and potential play them as same customer. everyone think already We be a in through the the for and long-term about case. are potentially in SIA We've the context out that's the forth. the I to is of think politics so news still we talking seen the think Huaweii XX% quarter, those last that gone last

did worked findings with and initially reviewed council, so shut assays shipments certainly the forth. we export our So down

types related network not know in we're XG-type equipment, just resume the there stuff, in not handset silicon, stuff. we sales can we determine of So to it's sell, we're

for view So very strategic is any -- certainly low some threat don't see handsets. opposed the we sale audio don't amplifiers power we not by our is there of

obviously for export to our so if a days early that it's to hope the license the coming to very that, the first be under do get down rhetoric We in would filed saga true the that not we we pipe, would are license but ones among control. among - hope we of is

resolve we've very they we such can of is currently the cultivating news So made customer good back short after in very hopefully will in that big and side I term, business. a not all. at the We long-term politics progress that a pretty as get customer were good the a the way growing them pleased think the in were with

to the type remains around compelling the continue provide. it think that the able most We customers like we've solutions provide got case of we I and the that we're that think to technology that or rally

impact short-term is is I So minimal. long-term in relatively the story think fact,

Ethan Potasnick

Got feedback it, was okay. And and of some you're if a opportunity biometrics. on as I could of longer-term you are kind the progress specifically guys follow-up, wondering in you to guess just then, expand I voice sampling regard with what seeing, receiving? your

Jason Rhode

lot a certification the gives solution was get there out behind a of devices. we're receive the so great Yeah, of us, It to to lot in the customers. interest That that. voice first FIDO

I think, not to implement give to and solution a comfort you're intent the that's that going lot some that, our hacks will that customers that like be things intended you certification. if Class of as subject of

are a positive. So we're It's been customers result robust. we've us device evaluating and powerful very legs designing people a to. we of very that see extremely feedback, that to capabilities feedback has it, giving technology pleased lot out it with got the the with promoting of The

the to a is biometric from a has to time. business, we and line, good been into product first type probability quite big voice something the of that note this for It's turn productivity us be over see certainly us in usually it important

as for This in it's technology. thing first for headsets device the for same same We a compelling the that we're of but very hands-free opportunities whether whatever of underlying see us interface handsets. be, specifically the time voice been and on at specifically it handsets, use based has with any the might see targeting or not various application other solution, necessarily over sorts well, is

a was good The we great just the see opportunities continuing of and We doing away really that. for FIDO good of us. team's So thing chip feedback job good and milestone see to results. a

Operator

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

Tom O'Malley

to guess in mics specifically for the you I first a working I Hey, near here a the talked customer. MEMS O'Malley on in Tom you you I guys. bit my about don't results. language guess little future. prior talk that is and This release going nice quarter Really is be lead Blayne the Curtis. Can relationship significant in the and contributor that about first one with guys Congrats. being remember my referenced releases. that one. in

Jason Rhode

We're still as do importance. customers revenue. We working with of best be the for we you term would imagine not a target telegraphing in near -- to now it the big the in order

The like pulp to be strong I that had that very wanting be really kind microphones, for we've of surprisingly regard [ph] customers a space. from us very, supplier pull to in high would customers us from in is successful

as what of it want we shipping to shipping need that things frankly but with ship are want be do a most about and we still be we to volumes. bit things to customers we details successful, cagey when are critical certainly are opportunities to little that The and we're as in in is very -- going the lower be we reliable, case

and think folks a the side. of with capabilities traditional stage. timeliness to leap hat on First, into but Microphones and reliably successfully, we long the want them My do we are kind more main can the we off don't is to right hard. silicon do we that better, in make to run, the same

So to here. billion are customers to things going that that market of that multiple continue buy with for think X north microphones happen

we're stuff. targeting microphones likes for targeting other and So that properly. We're command not developed a toys reasonable making margin can if premium

So good in think to shape we're continue there.

Tom O'Malley

significant past had is Android pretty the with helpful. the And that of on other the That's that's a couple in side business, revenue. clearly side. a to one you Samsung have both earbud then And super Great. really contribution success of guys amp just been around my quarters lot and the

guys. terms with haptic XX of that, you the the working XX talked next to Android, mentioned of seven you months. in in about then And have release three also top guys Outside of being

to You're the see customers more to coming going market. some

dial. that inflection is of as for When the that customer, really when impacting turning moved bucket other up outside that point customers as last being revenue And we see much seen that we've Samsung. for quarters do Samsung two in

Jason Rhode

not the too is is Korea. in that big not, as there are Well, there guys many as

industry see line, grow thing. to aggregating continue does that's, one with that's not more Korean all base knows great product particular more to over as a the grow can our and we've be it's follows off but relationship other our take time at with new that customer to that got devices. So customer opportunity there and our unpredictable, good bases. types good anyone up is pretty content It there opportunities We and

at of that In in to customer dollar particular - point, the out a the wins there got in specifically into in China of Android couple be broader North of of volume. we've run good America, a the America you Android a to the in the in with - have lot up of bulk even our it or actually really but North this customers largest would longer third do turn aggregate exception large them

progress good be of growth either. type it on to but that see front, stick we curve So isn't going there a hockey

Operator

next [Operator question the comes Needham Gill with Raji line Instructions] Company. Your & of from

Raji Gill

my for question to on traction of for amplifier of in There your been overall market, the the A traction your the wanted on DSP. wanted compelling smartphone China, mid-range taking a Thanks what handset amplifier momentum. is but weakness questions as congrats the China has and market there that well because market boosted to in share solid you sense you've very a have kind see small in had integrated in of Yes. some amplifier in market that products? get China

Jason Rhode

adopted would whether amplifiers really in nearly stereo. as broadly pretty or new that's contributed longer We the to appeal say been of development well. China be the guess think ubiquitous haptic that's the mono us run I there it's success I for Well, will has there solution

everyone amplifiers because appeal Android a it's Certainly, but the sensitive cost happen codecs smart market, would more XX phone quite such getting a using handset. wants who and potentially be louder or your makes better seven a folks so just top a to of which and being of without forth, speaker a phone to little to phone is -- speaker replacing limited micro be

been we've to and that to audio during made continue, haptic. yeah, with a year, progress So, the big both Android contributor past the it's with again and

Raji Gill

respect your and noise of cancellation. machine is and -- biometrics enhancing on the development, technology networks training think the do voice to the neural use that in providing how side And your more value important of about with kind a how you on and learning

How are Cipher we your of a ago? company network and learning that you able couple to years leverage neural bought when capability machine

Jason Rhode

Yeah. memory, a they were That's why us good in we although biometrics both voice team, we into bolted and memory. That's exactly itself as machine bought a have currently as significant has for to impact the a long really it algorithm and good tune an processing learning nicely low really of to very them, algorithm the to traditional deal into it that are that's potential we see the for the directly low deliver. dovetails implementation in potential a mechanism the or training big to signal latency power, be really run used

well. directly I them like that's there, some to say, to So, important us. plug worked that are It's yeah team a great out developments really that

So, that's well gone overall.

Operator

question next with your of Adam Lynch. from Bank Merrill line of the America comes And Gonzalez

Adam Gonzalez

the results Yeah. Congrats in on solid execution.

what expect see QX about QX? Samsung. would there the talk the your what are? throughout will on just year? Can peak the Was generally be, question it it to quarter first generally be out last Just thoughts figure Just trying to that the year? And ramp you you

Jason Rhode

I mean, is customer's ones. big that two to kind relative flagships, there of of Well, course,

both in I well usually known. think are of We those a timing way. pretty meaningful participate those of in the

change. I that to expect wouldn't So timing

We time device devices. about launch. shipping the that pretty with year, up better some We ongoing to lined have talked flagship But of done started that a buds over course earlier have penetrating seems the this wireless other job strong that of opportunities.

be may smooth a things that hopefully little bit. out So

those And less. throughout type a are couple of kind we've of year, mid-tier the penetrating less situation. little bit and are smaller little scattered the volumes then dramatic two, some Those last sockets. had in launch ramp success more their years And a over of

situations. those of some soften of help quarters rest might that the it again type versus timing So

Adam Gonzalez

How this That's really exclude but speak your the the last wondering you it. from can't half then, more would are heading And much Got know customer, normal characterize I versus year you fiasco your largest of year. helpful. if cycle? we just second a whole into about visibility dongle

Jason Rhode

very which a is I we have into at something good mean, it people and of just great bulk. out product, isn't The we don't that - we're ball our crystal course, the in visibility It's question but account. a for, is buy to has lot. get really turn how been many which

perspective a Well increasing and penetration we're in from elsewhere. our everything handset

as could you So relationship referred to possibly see good so obviously it's happening things out a the great about to continue customer we and helped best there.

Adam Gonzalez

you. thank Great,

Operator

Instructions] now at the questions turn there are over Chelsea to [Operator And call will time. Heffernan. Ms. no further this I

Chelsea Heffernan

are Thank questions. no There you, operator. additional

So I'll Jason. the to call over turn

Jason Rhode

Cirrus to portfolio the are and you, our commitment a broaden development differentiated continue our increasing the and product in growth. critical Thank we - the With Logic executing optimistic in summary, about mid-tier Chelsea. new supply chain and quarter product are strategic excellence In we June for initiatives and future. markets June we while smartphones believe innovation that target, our design long-term of flagship to demand for penetration

August webcast meeting stockholders and at annual of X, presenting Conference of that and we be presenting on Friday, the available investor.cirrus.com. our Markets XX. be Internet Vail Forum annual on also the Communications Live in August hosting the August KeyBanc would Boston on conferences will I Leadership Technology Capital will at at note Technology in X Oppenheimer

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

Cirrus Logic (CRUS) 31 Jul 192020 Q1 Earnings call transcript