CRUS - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third 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 up the call for questions from analysts instructions for queuing up will be provided at that time.

As a reminder, this conference call is being recorded for replay purposes.

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

Thurman Case

Thank afternoon. and you, good

Joining me President on Logic's our Chief today's of call is Officer, Director Forsyth, Jason John the Relations. Company's Investor and Heffernan, Executive Chelsea Rhode, Cirrus

directly information company's at Q&A questions at financial call along PM reconciliation to our of to Today, are X:XX session submitted via earnings third this feature quarter questions covering us at The with the Investor press GAAP webcast results, of email company all available the as shareholder investor.relations@Cirrus.com. information as letter from will comparable release, for investor.Cirrus.com. of we results the the analysts most the website a well year non-GAAP Relations fiscal financial This the at announced XXXX financial including our Eastern. approximately discussing our

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

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

Jason Rhode

Thurman. you. Thank

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

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

of per were GAAP and revenue $X.XX as haptic $X.XX non-GAAP revenue earnings respectively. into million, Cirrus than codec of volumes amplifiers share smart and 'XX drove above $XXX.X higher guidance, drivers boosted anticipated QX shipping FY Logic delivered smartphones, and

the were variety and engaged was the sampling initiatives. product with development and on continue activities across quarter, devices robust and several begin execute company to existing a strategic During key new devices, We actively new new of customers categories.

XX have establish strong processing signal with appointed has audio have As number we we Furthermore, components a John months, been of Forsyth Logic. expect next new domains. and the of a traditional and forward excited President to to market we to XX products other are beyond to announced voice position or foothold we leadership bolster to are these through in coming move that our expect that pleased Cirrus

As President product is and product strategies. to assuming a teams drive while company's line leading broader role operations continuing in day-to-day development business the

As working will and the oversee Chief of John I'm Executive On looking I note, with direction long-term personal role. growth a forward company. the to new his Officer, and

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

Operator, take questions. we are to now ready

Operator

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

is line Your open.

Tore Svanberg

strong you or the using you're if don't be to his was to the the products I on promotion. that could in prepared results, John and Yes, node? these share hoping I will types know next thank XX and from congratulations you nanometer. XX transition timelines that of congratulations to address on the generation

Jason Rhode

would shrink component, silicon anywhere Moore's would digital. for generally nanometer going as Law doesn't we speaking, to signal really very been in much fully we case mixed to certainly to. XX is going great node Yes, XX migrate a everything we to happy forward. do as digital be for that curve that them of XX Generally analog near dynamic the imply a it's not has us as sure need it's, the Yes, then think different piece

So, just expensive. the likely most and from to make you'd shrunk it if it XX, more same you took device XX

doing be reason to one board number XX be real which space, in of power related that, the embed being often and remarkable. could more could the a we signal bear is area it's in to but our be be amount can more a silicon able So, nanometer digital processing to that or for lot power. really domain It processing content could bring

things of smart be a bulk great such, run. a there's to we'll of course chip test ago, really got remarkable IP and and back the that's result exciting performance to we've it's even fall, while in through our nanometers, do like more that long things such first so able work out codecs So, but the of really our this XX that box, down to the

about about So, and first what really because capability. be a the of we're lot products commentary lot DSP want to a imagine not but you forth, doing so can exactly we would more that that

out. as that's following the a got that. this that that going we've beyond we've the We're and far excited excited that's the something new new likely about most for nanometer year, got XX be years about further As would year timeline, stuff couple of on content still we're stuff

Tore Svanberg

any voice That's and follow-up, voice signal talked a you things you're that letter about domain. little I about closed-loop as several shareholder make my beyond already working and references to and the But processing that opportunities helpful the the other audio on little know controller. domain? beyond very in bit and you've audio

Jason Rhode

beyond handsets be that that, domain the controller where don't kind thing they that we really existing our further about we about Yes, beyond of different to that are would want an broaden is track. the in out for in anything than year excited in entirely only that and we're don't, There we've I technology things on that that beyond. The non-audio, we've be other continues example talked are mean have again of haptic -- non-voice we've definitely say extremely additional about taken just closed-loop we to that audio.

as of well the answer that's kind audio as voice The get lineup nanometer. question and implied the ever and nanometer of other long-term. XX about in good XX think kind I can things as continued good is to I and as there's having a So, remember

Operator

next question with Ramsay comes Matt Your Cowen. from

Your line is open.

Matt Ramsay

you much. very afternoon. Good Thank

off, congrats, First deserved. well John,

The ask Jason first I thing John. about, or think I wanted to

or the there. was shareholder sort what portion was three And are Is presumably is mentioned think outside I things past, top or had into Android Android -- and that China. I of with I four products something read around to there the what traction and levers One to a are in doubles that and the letter I things top expansion, that I Jason and you before. of OEMs it mentioned in is saw an of there are you the you discussion in progressing know the singles significant expansion guess you across guys it in with the as haptics amps the Thanks. but described that know. driving are Samsung OEMs

Jason Rhode

certainly are China and There we've of shipping would of doubles definitely kind than had the made -- still the I good Well, they progress the there, been most the we've -- is traction runs definitely singles device characterize is top are audio it bulk model-by-model, we've more accounts -- XX. it the as and home to with devices. those in by amps is haptic followed

tuning noisy -- kind enough more let doing via doing there for so to moved kind flexibility they those but parts those our teams if that well were new you of down well architected some software we're part where logical and the bit you of always reason, the adding would parts the of of long-term of of of opportunistic, guys is of bulk XX and is there device to into well ranks same a enable to of with both of a be a audio, we we devices march guys is the support larger top so movement, not there move tools more acoustic kind little a specifically kind but a our be. that need functions kind lot kind as we who have for much the are going definitely and element those them. both area dynamic forth can to. to tuning, the that up of what's course So, number It's quite an the of is as for as customers, with have feeling of and within is example, composes It's where plan critical

in received China, is their China's own course biggest been own in of array this there. a They, marching there the year. well then that's customers of guy all past kind its complexity it. Obviously, got wide to, their and of drummer So, got well, to that

Matt Ramsay

count head there know and investment for in like going the contrasting Thank quite reallocation new OpEx been guys the last restructuring XXX OpEx is it. a MEMS guess bit talking got Thanks about seven, some some in you. wanted quarters, headcounts around about the XXX, chart just OpEx. moving it, for I to XXX, Thurman over those guys I you maybe Got follow-up. have to, about of helpful. of don't few versus forward. as parts, put medium-term my sort talk it and always I the the letter actions a people eight of and That'd down, There shareholder is products be around a ask that looks that. and

Thurman Case

some many Yes, But time. as seen in Jason's this noted, we've that opportunities we resources. is with as real reallocated those quite haven't a as

at looking for that So, in mean invest flat SG&A relatively should When start should you us. we'll continue remain to R&D.

of infrastructure Our don't see is a on and there. investment good we lot

of basis. look on forward year. terms in to looking you're how it does When So, year-over-year a next

be for from will partial year the this expect it year up still what Just of we reductions the will that be grow over it in don't happened up significantly that effects catching entire pieces year. show next will because general, of to the has

So, that significant. with we're basis, increased quarter-over-quarter because increase or that like revenue to just won't see hiring expenses things on us a happening, you

Jason Rhode

the we've the was the victory call. little I would this at people bit last a to redeploy a big talked that which successfully for that, to wanting last that MEMS we been on add on redeployed And point were thing company. have that the about

excited think really signal the never they're folks question The percentage of of very of towards in and an you activities are a stop that a It's is that. kind think the this of good moved to like up stuff success. new, carry-on these of disappointed awesome these I And the doing we're sorry, got on stuff following was of opinion. response fancy these follow-up moved things is large prognosis to tricky my those working on want did we to to to not team highlight to on that the that but be it. new particular very one talking that folks to, that, mixed on microphone probably I redeployment job

Operator

question next Blayne with Curtis Barclays. Your comes from

Your line is open.

Tom O'Malley

for on to pass as and Curtis, O'Malley Tom well. Blayne Hey I is to guys, John this my congratulations want

just looking the deck. at first The slide

custom given controller see do the customers of lay $X of guys You ecosystem its in that with controllers, Android start XXXX big a presents the if for the you you about design and in and way you closed-loop, that new particularly out may opportunity opportunity ecosystem the one. this in time, closed-loop elsewhere where the most haptic Can you billion for works target? challenges you work Android some in into lead particular, with and customer sometimes particularly down talk the the for those closed-loop like drivers products SAM

Jason Rhode

I developing. mean we're that particular thing that

it's that would keep be intended on in obviously intentional. that's closed-loop not for that amplifiers little focus are see certainly we that primary don't Again, this audio a there There many that ramp -- take We haptic at will down. life this sell android wasn't that to an eyes of on talking fact things thing controllers thing be about time. that been entirely do It later really we a example It's that or trickle that our of of follows. not, its it. a a that level are particular certainly opportunity. bit investment. We that are own to we've at particular But not

Tom O'Malley

billion adjacent about chart, other $X you still just Okay. for could bucks for those then about pretty further is areas above on because might. that mobile have the of billion historically opportunities there? right a talk obviously targeting there part big same MEMS are And just you SAM been SAM just What

Jason Rhode

audio going these to the of we're skis to our Yes, sure. directly that not leverages on another signal of deep non-voice one want mixed advanced it's another just thing but far and on, too that's Yes, ahead that get handset sub-micron capabilities. in areas our

really So, wish it's more very that can about something it. we're excited tell about you we much and

Operator

Christopher with from comes Your question next Susquehanna. Rolland

line open. Your is

Christopher Rolland

about Talking John. good we a report. the on Congrats here. for what second have Congrats, to fix

media the in mentioned for You letter something consumption.

is the like units that that of a Thank it handset. this like think remote something then something opportunity So, with is think I millions an with so, or also do or XX XXs And or the starting a mentioned is small you still you. about for next gaming just vibrating months we of went. over really volume is

John Forsyth

is me take This that. John, let

the So, through beyond I is haptic replacement. think there can we of referring of that button enrichment user what we're deliver specifically the the to level simple experience

that So, didn't video it's playing example enhancing those game can physical when developed within the The through the even examples gaming we're beyond device in virtual user, end and of And haptic technologies that's experience the the lot talk alongside haptics first to kind a about. add the deepens that, in the smarts the instance of We've can still their talking feedback talking where playing give and about functions which interested, enable for area if functionality the in experience. extend we're developed that the when more of media consumption, incorporate sure the very which We of user and to provide about that button feedback of traditional game provides terms of so but during that. get smartphone for to richness providing feedback use kind we've primary products, they're necessarily tactile we experience the games, in customers seen on. that

Christopher Rolland

the know, to nanometer the if don't Jason, analog codec, there versus and nanometer. sometimes included just digital I and XX if perhaps, expensive changes know past. changes And or an mentioned car Thanks. the investors you more for expectation ASPs potentially margins I XX in was I any then it silicon. that's silicon, great. if margins. only that or surprise know you can ASPs talk there Are in about differences by your in these Okay,

Jason Rhode

XX from no be a changes generally I it They other. usual has generally a but basis the, my move ebbs not from always the the is well. primary say, I I can expensive our degree, smart would, today flows generally margin it you the it than that that a one to more is as and to to shouldn't other digital took or would So, codec though XX minor is about else XX there change anything didn't drivers, would about way it and if be that -- on I from would think make to to margin perspective. ASP answer add certainly, on moved additional motivation there as to being an impact content

ASP So as the also should that an play run in long well. be

Operator

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

is open. line Your

Charlie Anderson

And only to year a congrats talk there's about my questions. increases. on we've taking Yes, strong for guys. content thanks Jason, to few promotion got as a John the of you and My in on my I congrats well. so wanted Yes, the the for left with results months -- start lot

terms got any of you otherwise. fiscal how growth on So, big 'XX view or in follow-up? I in up picture a shapes that terms of had maybe then And wonder I've if

Jason Rhode

actually. do I yes, Well,

that helpful the color But some that. just for forward-looking able So, Thurman do provide would as know, out. on is We be said, probably here's earlier. we guidance. to don't I'll for pieces we of they you impossible a moving harder, how say mentioned that annual is of love statements know mean would probably it's moving lead those probably to as us And don't, parts, I to of lot some net you. course, There

on everybody about track. in been excited different laptops. We progress multiple The a expected thus far applications, tablets on last build in incremental So, wearables we form That's is a in said it. rest about. laptops seen out great it's run. those earbuds be we hearables, from wearables, of the has clearly We're that appear Those think excited new to platform long there new untethered factor silicon customers. and fall, to meaning tablets, that

new we attention us. a from benefit factors those to that's forward, getting from of as a year lot content completely are lot during And So, the going of be well. able that those should and are form

in opportunities this expect the refer later of So, the that to we next several handsets couple to we've content year. to questions. the over kind Further continue of over deliver last opportunities new Further years.

we're right. is That takes said, pleased there story handsets, very, of business doing meaning obviously revenue up don't sources, I often no that. that just anybody we're that the is from Obviously, are We're and individual puts which overall currently. our well that every into is able to This reasons. element revenue variability driver with as the content to interpret want other we're year position our into not the volumes get obvious overall and for to handset very largest our to news exception in very of

or launched do year, new are us outlook Of a hard full one for robust when how actually to models there. which will it but those course, call of impossible have makes for us know its they to currently things harder very we the

then other our forecast. So, overall all ability trade out the beyond and of of that and course of our of Coronavirus to are issue, control that the of wars, is and against this things economy terms backdrop

that's like do put of and So, and way by our the will thought, well, related of we've things to a plan accordingly. the I approach what specifically lot as take conservative a into one for view added a factors investors think we happen Risk Coronavirus. good And we

add those. for look a at have to just I'll investors reminder So, a

Charlie Anderson

Controller. Excellent, identified all of sort so follow-up, color. then you've thank closed-loop the for it much And for the you my

you opportunity of is potentially one another I year just the that looks. is calendar that is wonder after. this or that as a as and into into sort then these sounds is it other like year proper cadence adjacencies you're 'XX move going think I or how there

about thinking plan of kind your Just long-term. Thanks. this

Jason Rhode

fell would just it that will kind both able long I run. things of certainly to to I it that we're around, strategically to mean and think would we and in how we these talking build platforms be we that's out, be expect are about that our incidentally, important of things kind continue of those new very the

curve to be continuous kind may amplifiers, kind with you the that this thing not actually expect audio say, but is thing. do them onto I and being but them of mean able of we like So, of the improve get improvement just that's modify is we would to the be, to speculating, adapt which every year, and a cool codec

of value unit One led dynamics much same things on part for not handsets from customers. such year-end of same revise be the the afford you've many that shipping to cool volume to then And good has to the in can which new is year-out, pretty always the pricing about high-volume that perspective. a frequently you add obviously customer so got with some it very to devices got and kind

Operator

next of question Bank Adam with from comes [Operator America. Gonzalez Instructions] Your

line Your is open.

Adam Gonzalez

at it years does visibility if customers, into say. do you about question you In that broad-based promotion. for top far Thanks. one the potential more of to or alluded of the across design your this talk How voice And thanks these two let's engagements visibility to and domain. or opportunities extent focused taking guys, core point. and wins. then in Hi Are terms on narrowly congrats. John, my were your out beyond audio your

Jason Rhode

level our customer investment that's is focused heavily of our base. of our of So, our -- tier at of the current top customer definitely yes,

of our -- visibility, bulk as bulk business. the far As of the

of we least that's there things years I believe understood often things maybe three we're actually very piece them time. for customers the do somebody are actually I's but are wasting are everything and a time are think understood generally away of about wasting by up about supervision of always and not not for and the in crossed and and it's is it's meticulous silicon something back Customers big lined T's a working making about pretty are us. investment shipping custom so lot not well forth. or that on dotted one when from forth There is that is own a good their probably revenue sure our and

we're moving shipment it's more, much in that for lot got generally are the phase we've factor. know generally sort. than pieces things on know of important phase, And I which to, what sometimes us much bigger So particular form design the means it's a what we rather quite by of the and one a of is mean that completely a visibility working if they we go new

exactly course a programmability come we of much with have we that falling or know know to into, bundles and we an kind audio if is this codec, say going or actually or a their your a customers, what need we so to going you're they're heavily we of always things especially for involved. know you we that change like visibility lot because mind of to codec going the don't make enable on decisions audio that that to around designed Sometimes one, long-term never any -- can shorter there's end forth. devices example, customer it, or then know what don't they timeline market more it don't with have of And feature our be but able where promote in goes the marketing we in new than

and would to often there strength most great picture a that we've us. in semiconductor relative say is definitely pieces the I I definitely it's got big late we know that's yes, say game, don't but a sense some moving that would So companies, visibility quite for until

Adam Gonzalez

unidentified $X near-term. if rationale mobile Thanks. can that billion hoping just that. opportunities signal market Great, a helpful just your some behind the $XX put Is addressing you I the second explain that. which beyond it looks you in in And then it I I'm Appreciate the in a billion that noticed the presentation opportunities doing corporate you like of context think added opportunity, there the context you that's that put you're could it across mixed maybe and a adjacent my signal around color. be slide really question,

John Forsyth

past is just growth increasingly our as you we voice This see Yes, as right. of gone That's we've here. we picture again itself, our portraying our the but fits years, closed-loop we've, there within we've application through clear business, of that's exactly growth what that the mixed domain. audio core of beyond we no leveraging kind see the it and few right for that exactly IP. is as shortage is new that a that within into opportunities see initially expanded a of reflective to how opportunities of haptics John being signal of We've refer and really into as advanced controller will made within core range audio that into that capability a we're of category lot

As Jason much some But we spoken see have pattern. that about line us in additional same previously, to new following domains opportunities, reasonable beyond the sight continuing of you those very we've progress. can indicated, again, of expect and

increasingly was advanced as are power, mixed we the as signal variety to, forward processing product a seeing latency, we it's trying to case. It certainly bringing types. opportunities move low the think I signal around of low and

range or you demand in in go back serving that of signal areas the grown other mixed engaged occupied opportunities the broadly is were into three market as with has more think grown company customers I and the If we years new as we've audio four just ago, areas. has fully

coming that evolution and go we continue progress So, that we the significant opportunity as in is see there years. pretty to forward being

Operator

from comes with Shusterman question Needham. Ari next Your

is line open. Your

Ari Shusterman

kind question do is taking I'm ANC Ari, that. moving in adoption Rajiv And What is forward. view what about talk this you've you this unfettered question for the you. my seeing the of been trend Can Thank in Gill. you market. headset Hi, first about

Jason Rhode

Bluetooth so, battery are we on buds a do from of so, not ear need they to is, -- Well ship we performance untethered do that something targeted. at product the perspective. issue ANC, our got and get life that useful with with you to much that constrained absolute there customers headset battery And pinnacle ear originally ANC specifically the focused out being our overall to buds When the the the still targeted more to currently, headsets are do developed really sensible. was we have untethered do be the what performance that

on, And continue canceling. that's pretty wide array it's can think see different from some ear the one things of there. content activities Longer-term, a We do we but over that wouldn't space. a in on approach potentially bud that, got to of of I focus can we primary say noise something expansion time. interest. untethered the them, work to it's so, We've that's we something a

Ari Shusterman

a and margins expect to as throughout in gross how you've you seeing what follow-up, them been And do trend XXXX.

So, a kind of be rough idea helpful? very would

Jason Rhode

other. mean, got a ton drivers, one We don't the of just at I we to it. continue major see a a way quarter model or There time.

be of as the that So fairway I that is lot a what excitement and front. that middle of might for take I the looking it is, but would just of kind on

Operator

from Stifel. with comes question next Your Svanberg Tore

is Your line open.

Tore Svanberg

you. thank Yes,

follow-ups. two Just quick

new of First of OpEx CapEx fine ' to what fiscal spend about processing, you especially all, have we the requirements. now talked will about CapEx but XX? some support for Are do sort of opportunities in right sort signal what or with you

Thurman Case

this expect wouldn't a No, now spend that, whole on But uptick that groups our year There don't big in lot. seeing some see CapEx. We an I things. working don't buy our a you uptick capital our, tools beyond certain might in for expenditures. that in be are will certain

Jason Rhode

I Yes. too. think And would

usual, if was perspective intensive but not more Just a probably that their tailwind CapEx stuff a, bit a so that is our as MEMS various not usually a it's a big little obviously rate run piece, perspective, than It's estimates, from for businesses, the a driver. CapEx would into generally on where of us from sustainable areas failure find regard. hopefully is good because reliability we lab. a advantage thing analysis that if like cash the is it's opportunity, good tick really up, I do our us upturn but That and a you something long-term see

Tore Svanberg

perception That's in more helpful. correct. And that more else? is bit about something my kind but or apps like is of just correct that you perception Last you, it traction the certain and for sounds so, primarily getting question, if boosted here, wearables,

Jason Rhode

within I think We go We want things to real of wheelhouse. going excited -- record. I into exactly to statement really things that specifically something plan kind things I again always have -- about. there, mean mean things but I of doing we're wrong, forward-looking should but we're we're don't progress are get good what in wearables can some our

is the yes, past is might point a exciting by in it multiple things So real to very really segment in and trained picking harder not we these whatever I clearly and there first it where can off silicon for on start ready prime where the execution the But we've is time the time in time. that's of getting definitely they the as our excellent as machine think get time on, goes generation. gets be then there custom on an deliver interesting market opportunity cases I usually

Tore Svanberg

Very good. you. Thank

Operator

I now Instructions] back Chelsea [Operator questions turn are over the will time, this There Heffernan. no further at call to

Chelsea Heffernan

questions. are operator. you, Thank no additional There

the So, call I to will turn Jason. over

Jason Rhode

for exceeded experienced QX In Chelsea. summary, 'XX FY you, higher than as component and shipping we smartphones. volumes guidance results Thank anticipated

and a believe will execute that progressed our During fuel address positioned key on product continued well signal for is the that pipeline and future initiatives strategic success. With major compelling voice we quarter of development we processing activities categories long-term growth. products the audio, to believe Logic across all company applications Cirrus other

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

Operator

This conference concludes today's call.

You may now disconnect.

Cirrus Logic (CRUS) 29 Jan 202020 Q3 Earnings call transcript