CRUS - Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic First Quarter Fiscal Year 2023 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 recorded this replay reminder, a is for being purposes. As the now to like would call to I turn over Ms. Chelsea Heffernan, Relations. Vice President of Investor Ms. please begin. Heffernan,

Chelsea Heffernan

Thank afternoon. good you and

Joining all fiscal Today, we Cirrus our financial Eastern John and release, available call Time. the discussing Nathamuni, analysts at announced me our the first approximately for feature Executive Q&A financial p.m. along press with quarter Letter earnings Venk this will the Officer. Chief Shareholder XXXX Officer; Forsyth, Relations Financial The Chief session covering results Investor the on are at company’s today’s call website. of webcast year results, Logic’s is X the This company. from questions

include website. press these disclaims all measures By on new Commission this Reconciliations discussion of Relations available risk included developments non-GAAP revise expressly to that certain cause to current may material latest items. registered this and forward-looking from results cause providing the information, as update are Shareholder uncertainties that forward-looking differ measures filings expectations. measures could comparable release risks company’s projections. non-GAAP on as the we the refer with excludes the and today, a the additional financial result projections actual are which XX-K, or and subject discuss the Cirrus any or of Exchange the statements Additionally, to as and during from to and obligation materially release to that available Logic company well that results the the are session, website Letter guidance will any we the and that of factors Please and Securities corporate -- for their whether projections our issued differ or earnings are will results statements may other GAAP Investor most to in directly call Please actual note on materially make the otherwise.

Now, John. call turn over I’d to to like the

John Forsyth

call. Thank you, Chelsea, and thank today’s you for joining everyone

the outstanding in As Cirrus of constraints. record seen delivered release, revenue, even chain continued first supply you in Logic light had with press results quarter

and the three to customers of one, driving in Before continuing are success are, pillars of beyond smartphones smartphone that and two, within I’d position the We call world a the we in of the believe significant growing performance smartphones; market; the sales world-class broadening and recap into products execution in audio discuss details our now like in leading those this mixed-signal seeing. moment by both product yield to high order our three, class key outside momentum mixed-signal leveraging audio take engineering opportunities footprinted leadership to area profitable strategy applications to expertise will maintaining the a we and results, the key components audio to deliver we of outstanding area products lines. our build beyond. These

quarter engagement codecs. have we fronts extent. portfolio all by execute customer to we impressive continue audio, In our amplifiers of three an been across This on to encouraged and

for codec smart in production node of also introductions initial next-generation and smartphones began smartphone a developing year. ahead this began XX-nanometer we new quarter, later the the During process ramps

our has our we laptops, laptops. out longer Galaxy laptop to growth the proud strong now term. we market engagement increased on in sampling a XXXX, quality new fiscal taped Award over quality market the new codec, remains components. Samsung’s year are opportunity architectures XX we received our and Despite believe new In Division emerging outstanding audio diversity demand MX to models This contribute we for revenue in Quality execution Logic we and can Cirrus both featuring laptop Best benefit optimized recently specifically the reputation from amplifier there and customers. Additionally, have see are a these recently demonstrates customer come for in further to for slowdown from near-term as performance. market, we audio several for secular capitalize an continue to class see trends world To high among that the expect to the in trends,

Turning product high category. are mixed-signal ever performance stronger across design and lines, to than our development activity this

from our longevity customer the we of improve mix higher experience. and summary, further new power bring battery will collaboration and favorable customer also have and in conversion Our IC, we our property control rate attach and are that our our customer fiscal devices power, new close continues our innovations investing focused strategy product smartphones in in in serving engineering areas. newest opportunities year our application new benefit components. customers, In addressable years. coming to quarter. remain functionality first-generation and executing our our the intellectual the and identify And XXXX, our diversifying work capabilities to to and both in into and that In success include market challenges, to delighted including portfolio of against building expect with progress in our to on strengthen on market of today controllers the engagements enable the engagements together the our financial We those results, with more the health address camera broadening around on we a as of camera advanced camera we controller camera and the

overview the to our first as solid today, With the guidance of call as are for well we XXXX, the me quarter making with fiscal beyond. for XXXX. over that, to wide in QX a fiscal and believe we expand of fiscal results Venk pipeline let opportunities year an now have financial XXXX dollar to range of content we our investments provide HMPS technology And turn

Venk Nathamuni

first Thank a record and you, was for Revenue was John. from revenue the a of June ago $XXX.X up end guidance XX% our Fiscal range. and high million the year quarter. about quarter

increases the was mixed-signal million basis, $XXX.X gross and reflected the gross margin expectations fully due and by product the mix. that products. in shipments performance exceeded gains gross ASPs. took content by to quarter margin a high offset June profit was of higher impact extent non-GAAP favorable year-over-year partially XX.X% were driven and our reflects down cost in margin On quarter. gross January during sequential Our strong favorable product a effect lesser ASPs results was to change were in in market a general mix. This product was favorable as The higher on Non-GAAP

section. and and margin down $X.XX came the the or the higher in of to employee forward, a costs. quarter revenue. slightly partially Going expenses million were cover sequential first in reduction Operating in operating despite million offset expenses by quarter long-term and expect our XX% per topic guidance guidance million the gross I sequentially. Non-GAAP variable of was related income this below revenue in our more line with share. the model the by decline development be was more Non-GAAP compensation in in This million, $X.X quarter midpoint higher $XXX.X net first product $XX.X range expenses. will income in Non-GAAP was primarily driven or was operating we $XX.X

the balance turn now to me sheet. Let

million by the of and repurchases stock XXXX the quarter. strong $XX cash sequentially days remains as $XXX first launches no days days the I’d in was $X.X from cash later inventory product have quarter, million, in of outstanding. debt approximately we this cash during Inventory flow I’d ahead was balance prior QX, $XXX million and to sequentially. up ended roughly of began we with due Our equivalents. year fiscal partially normal sheet up building This offset strong note, in line was we trends up year. note, with million XX and quarter XX generation, this is seasonal

quarter flow quarter was average we Turning for flow common at utilized $XX.X to cash operations repurchase million our XXX,XXX was and cash free million. shares from In the flow, price of $XX.XX. stock million an $XX.X in to cash of roughly $XX.X the QX,

of year authorized million of to end we XXXX, $XXX in company last repurchase the fiscal to the the month additional the Furthermore, company’s authorization. of As of share had million our QX stock. an common XXXX Directors repurchase Board up $XXX.X remaining

range forward. in return believe of provide for the the stock continue which to going XXXX, guidance, in fiscal to basis, $XXX repurchases, of lesser long-term growth a increased high-performance extent driven quarter revenue content largely now, our the expect a We by shareholders And second is million to form the will year-over-year expected higher benefit $XXX mixed-signal to smartphones. a million. On in of to revenue expect capital we onto we and ASPs

of earlier, gross I to XX% due we our As alluded product model long-term to primarily mix. to be around margins expect

driven primarily million. sequentially increase a As be XX% to from higher gross $XXX development expect million is product Non-GAAP to $XXX September is we to quarter, margin in expense to the sequential the range be of expected to XX%. expected range The up operating costs. result, by in

to sequentially. SG&A flat remain expect We

our this year in current largely front, release, and QX effective in XXXX deduct fiscal that companies year. than to rather to as On capitalize R&D the expenses requires them tax we earnings the slew a amortize mentioned tax due

We expect XX%. to approximately to our non-GAAP XXXX tax fiscal XX% rate be effective

expenses purposes rule, may in anticipate are as tax normalized return R&D for rate absent and this that range additional to to legislation. continue amortized of decrease under We tax the changes effective our to years any a about will years five

typical rate this mid-teens eliminating closely. effective we to support rule, that would without or year a I’d appears watching legislative strong which be note there range. In rule, in non-GAAP of closing, our had are QX impact be delaying XXXX. However, tax fiscal more for this the we our

our company will Going understand to there And while session. policy, let and interest to to note profitability not this accordance company discuss grow best both long to I’d begin Chelsea on relationship. in over turn the focus Q&A, to like will opportunities the call to the the the enable business that, the term. revenue Cirrus about to before we With with specifics customer, forward, we is largest start continue that we me Q&A intense we Logic related

Chelsea Heffernan

Venk. Thanks,

questions. start call. yourself the one and now We now ready limit Please Operator, the question to are take of single follow-up. we Q&A earnings to a portion will

Operator

comes of from [Operator with the Matt Ramsay line Cowen. Instructions] Your first question

line open. Your is

Matt Ramsay

wanted of that scripts aware results. one challenges globally, Venk. more the notebook an ask the going have of some in the wins were, you much, about but very number greenfield I for I are specific in in you you on and I and congratulations units we think, the guys. the think market all to all potential John, you Thank question. the this engagements of John, number Good much the might and notebook and afternoon the of trends audio business is just into

I just Cirrus guess wonder while what’s it’s to noticed half going And in no smartphone characterize which how I and am the the a business? sharply, for the I audio in the market feel sort smartphone guys follow-up I ahead on, calendar pretty your is that surprise opportunity been will Thanks, the So I I long-term could business of but the year China be you the business just piece down mid-tier. going bit on if ask large Android latter has that in you go of might relative my that given if wonder guys. of derisked?. into unrelated

John Forsyth

kind Matt. I you, Thank the words there. appreciate

do market it’s Let of about we the me the to as there with of which well I architecture change something are for but Yes, rate and as laptop really design are first. the evolving there we think drivers specific talk is around see power that haptics with activity. a our see headwinds market audio that are I if right appreciate in and on doesn’t potential very based what fundamental demand an in so. We that as now exciting. secular some because mentioned, being we strategy, of factors opportunities slowdown, alongside a there

us with number and small OEMs. we with excites the that laptop the you as are good given -- market, and today of four customers five in for relationships engaged about out got really we really those tend do of all have well fact are big we it’s us say, to laptop we opportunity top the So greenfield shipping when of a

So, that well. positions us again,

our to we I billion am size, haptics getting going what a to we a see power. predict overall planning within but $X perspective, the or as and horizon strategic higher do, this of terms can from SAM not across SAM audio In

the see So a are can building there that today. very for you we it’s attractive market and us momentum

the refer elsewhere business. of one our about to we on going And constrained. think, this your supply having move time very I been is impact last really within and to I of circuits chase selective but has that which Android had me has smartphones impacts business that I comments Android an that really our today to that Let am be on around and from question about made, and year back to

we So to it’s it’s the short confident month, question certain it’s being -- of a supply. committing of a feel just in designs, not if not not customers given question have to a we didn’t

being rest on of will So to the market far build embedded there. the as we we that constrained That still can and well do so to the through are XXXX. we supply we anticipate android we our that business of flagship momentum continue have said, and in fiscal that tier expand to look look supply, in

Operator

next from Your Tore Svanberg question of is line with the Stifel.

Your open. line is

Tore Svanberg

Thank Yes. on results. congrats you the and

of that. first smart that years as I is about two the and dynamics had question new years, codec. typically changes as The this three like you wondering there every or pricing, on new some things sort the assume know I was features I far so. chip just

that of greatest perhaps an opportunity on as So codec? is smart get sort prices some and better latest that to

John Forsyth

Yeah. Tore. you, Thank

all, the lifespan partly over market the product time both of and a of been the product amplifiers that on there codecs has or timing in years, relative of boosted First the elongating that’s maturity.

I So a an were ASP couple as more typically this effort yes, processing processing. requirement pack certainly drives of because a updated to going to specifically That’s typically speak to the with see in opportunity us. circuitry digital new represents features pricing on for do it to more update product a to lot in really that it this off every case from process significant investment accretion but that you is migrate the they out, when to XX-nanometer years. mixed-signal takes a -- from line to it node. that down a a from is XX-nanometer and a a of know, in But make some logic and -- so that. am -- we when not it’s cadence and to backed capabilities of That’s increased you significant far and lot we large you see expect bit

Tore Svanberg

the sure that, Thank you that. more bit And the was mentioned you real that because are intend move expensive, more Shareholder there advanced then of to XX-nanometer, can the down go for little the in capacity, to lower geometries. which XX-nanometer especially I to edge, on tightness a So more be there leading could going hoping also is understand right? this given correctly, or obviously, I it’s you to capacity expand not want just I more that significantly really Great. nodes perhaps want you make more follow-up, because at go my you you but do but it’s to are expensive than Letter there node?

John Forsyth

Yeah.

depending not hit or I that’s to the the right Tore, it’s the product on the think on different do. head. line, whether nail thing you

a up little that Just topic. to back on

every high-voltage, think right, maybe to you take because since That’s cases place call some year and technologies a opportunities. the is on maybe last those it’s are in depending order exact a depend As high-precision in But customers’ of near-term, nature cases has ever geometries of new the around help we that Foundries agreement immediately if you know, get of of partly a in of economics of the technology I of are those advanced and content putting would and suitability But important support strategic on grow competitive dollar both signal say have process where In further mixed on key see -- cases more but environment different other we the node said, capacity a lies. plans strong could of growth to to some to will the took advantage we I we Global been XX-nanometer, us it. our XX-nanometer, that capitalize options. demand available opportunities pipeline see with ahead the maybe I product. on in in part will on partly given we this a also driving in and some our need supply, lot we us step our more because long-term then,

in that, in us see our do is great continue So to XX-nanometer expect codec case obviously, to point. a investment the

Operator

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

Your line is open.

Christopher Rolland

-- for your some question. guess Hi, guess My the my capabilities guys. around of mixed-signal and Thank there. question power I you is

going? traction and over update First, that’s about that time? then, secondly or we talk I increase guess, an their how roadmap And in Lion see and can for roadmap you any Thanks. power conversion capabilities your might

John Forsyth

Chris. Thanks,

what focus Lion’s But of both to has smartphone and Lion products. of the market continue sole market, team our acquisition, you time experienced the we about the IP was terms some team’s which diversity. bring team in excited and be -- product Chinese may heard the the those us can Obviously, the to both While the went for at beyond vision well technologies have those really on Lion always headwinds. Lion

part acquisition, since happened of a delighted notable laptop today of gains there for least opportunities But which to and progress in that for earlier well. made are products including outside that that on some major some team China, which the developing -- I about. other as some it referred is we team So great smartphones the power markets market, has a at us is focused meaningful having little

future going think good we is be of that part diversity that So lies. to team’s a market where

Christopher Rolland

Okay.

John Forsyth

Regarding our Sorry. -- oh!

Christopher Rolland

Go ahead.

Sorry, John.

John Forsyth

Yeah.

to for Regarding We to-date focused Obviously, I health around silicon have there. specifics. about been battery. the power am the into market, the custom we you power significant broader opportunity going not longevity. innovation done asked think there’s battery further stuff on roadmap go the conversion has and

coming the over So past our focus That’s investing that. and in efforts year are big the in we of years. R&D a

it of products. those nature will will custom leave -- the there that I So given

Christopher Rolland

I that’s how all, mention maybe of here. Android the state-of-the-state really or in forward you to Cirrus? And inventories best then for Android are opportunities I sell-through follow-up terms seeing or in would what first of beyond is? Great. the think guess, know would now whatever in I Thanks, you as the my downside John. love and you you see your looking them describe Android, and market there design did

John Forsyth

Yeah.

planet China-based think obviously covering then. quarter tier to saw we we well December engaged in and covered we And it’s it it, characterize given Samsung smartphone think with I December I’d about Audio Android how think and year in we top We top that continue first that well be talking the with slowdown very, vendors. to no are have I we in other when can supply, choice be the think Android make last were is, the sell extent for given supply amplifiers there’s beginning that on environment, started I the able we smartphones. of I Android, relationships over is been probably expect current and very tier the very Outside there expand Android best mobile we there the to we would constrained flagship to the the customers doubt that good more first time.

Operator

from Williams Company. Instructions] Your with is [Operator question Benchmark The next David

is open. line Your

David Williams

and I wondering supply afternoon that little for first, guess, about elaborate question. taking the if thanks just maybe Good of kind Hey. the you a you bit. bit talked but on constraints, a

maybe from capacity? generally better -- that the is seeing how seen, consumer get Just are you do maybe will do a available that think what think little have of we you softness just stable electronics kind improving you and

John Forsyth

I foundry -- it’s high Well, demand. mind at keep our is to think the we is processes on couple certain incremental major very upsides, important very, based and in partners, still seen that a of have in majority which capacity of but experiencing the nodes revenue process limited around areas

haven’t we movement seen as there significant So yet.

David Williams

just initiatives maybe we trending maybe year, term? OpEx, around for the about of it investment for should just longer How the Okay. and think And the OpEx think about you the have. if you some then year

Venk Nathamuni

Thanks the Yeah. question. This for is Venk.

to funnel and quarters, OpEx, as we our opportunities over have it have be relates the deliberate to for good to R&D, and because at we long-term in be come so over last primarily be couple very So us it it will the seen for see increase about actually of to grow investments trended will we look have good we -- R&D. -- a we as pipeline SG&A revenue we But the flat. guided as the we of

thoughtful not this So fair guess going be going about we year to investments a at our point, that full forward. guidance probably but give are it’s will very

in to so. for long-term. the sense will R&D it non-critical But invest We for do hiring us for wherever such, and makes to functions will continue control we

Operator

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

line Your open. is

Tom O'Malley

as Hey, guys. the into a of Curtis. seasonality for my had earlier ask into Tom is Blayne on the This to for Thanks just wanted outlook on I September, question. you in your and kind cautious it the June year obviously, O'Malley taking less being past better looks better. bit increased around a compared slightly of really into end But up with commentary you content years, September seasonal has a look ASP. couple to been and

talk particularly the to little just you are years? seasonal customer in perspective, on whether just a the prior broad and could So guidance slowdown that’s from seem if conservatism seeing pretty than less that’s so you good, or why things September your because some large

Venk Nathamuni

Yeah.

Let that one. take me

pointed the So lots relates March there’s quarter as were it of such. June pretty out, and us and macro you clearly, as with strong, to numbers shifting our and

and pronounced saw a much than patterns, has in the in say prior the for that’s thing towards the in order read that of and this years. customer the booking from actually different years. for patterns product year, what little I relates But, more would the that’s lead this anything specific rest the we as more -- are that driving into primarily expect the rest prior our of is point shipments think quarters. launch their to too well. would expected. just is bookings the that, we kind of it that, of March the upside it we But build as be not linear our and June Clearly, pattern don’t see But we should at of year see been we for have significant should linearity As that one order seen one -- and a to be because our our overall, we the quarter, particular

Tom O'Malley

the market, on September there you there was just on weakness any just in near quarter, color the severe. if obviously, see if Thank a off there things the you a Android have pretty you the bounce slightly then And the bottom hope any that seen that expect to further Helpful. term into market or improving Is deteriorate? you. is

John Forsyth

don’t additional specifically on think uncertainty obviously where any I there -- we coming Clearly, -- the lot Android have and did. market the I really products demand we where shipping Tom. quarter, color macro smartphone in there’s have has lot been very market I the mean within of wish into resilient. I a are of we just the silicon a

As has a uncertainty it. lot more you just Android around seemingly market know, the

Venk Nathamuni

and And that happening pointed those John keep around the situation pointed we have more shipping by have the signs what’s reading market, of of it to constrained. the China to Android robustness the then, as all of also little focus the and the eye. But primarily our And driven earlier, we end out supply high the develops, it. into world. clearly, has if of seems still John as are relates rest will same made are market been macro most to an we I the and it the shipments out, can are in in we add to a of that terms slice as

Operator

from the Ananda Capital. Loop Our final Baruah of with line question comes

open. is line Your

Ananda Baruah

taking afternoon. Thanks for question. if Good my guys. I Two, Hey, could.

the got more the of quarters is, sort well. constraints have stating a but then Then and of towards obvious, next inventory of real probably follow-up is of the over is so or seasonality that there Just demand and quick not significant sort flow assumption? audio will couple maybe sort assuming ecosystem I up throughout fair built at true a on your ebb a least as no

John Forsyth

working of silicon of Yeah. from that is just imperfect, fact the the our keep But our the our commented Thank where the can, supply we just whole demand on team on to it on demand. publicly that the the see of you, given our that the customers. for robustness based view goes spent those And have that side, quantity into we Ananda. hard as customers demand year products. but with ship we with up have Obviously, signals really as smartphones

think that buffer the I out silicon low. is of a significant likelihood comparatively there there is

Ananda Baruah

just a from in quick of And that you home there Thanks. and as work to helpful. work follow-up that sort exposure commercial a kind the laptop, consumer Shareholder opposed the so a of on the XX skew mentioned say you Letter, is towards laptop super in remote being is That’s exposure? catalyst to

John Forsyth

to experience they high by the very about, a hybrid used working. audio and list to out with certainly and spec of That’s did not within I five is had AV admit suddenly That needs that will is I talked the a those be conversations of part now, feature OEMs senior of very change, that think nature going that’s that class meaningful driven be that top the on secular don’t people absolutely it. four running drivers the Yes. one first have from was of to pervasive laptop I the businesses some of really it

So that’s do going we as to see that course, relevant as well. consumer, but be true of in being and the segment highly Enterprise

Chelsea Heffernan

With the for turn now back will final I the John, remark. will his that end to Q&A call session. we

John Forsyth

adjacent smartphone summary, applications record in our of in broadening In key drivers, new the high-performance markets. Cirrus driven quarter profitable continuing by Chelsea. three components mixed-signal expand mixed-signal audio, our into audio first revenue you, smartphones leadership sales quarter, June Thank in across and strong applying beyond strategic execution our to Logic delivered expertise

thank more are ahead excited and see than you and Logic. interest that continued we about we We ever opportunities for the your Cirrus

also the Conference in for note website Please to like I’d the participating KeyBanc details. in will Investor on Xth close, we we August be that our check Vail. Before

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

Operator

today’s and gentlemen, call. conference concludes Ladies this

disconnect. now may You

Cirrus Logic (CRUS) 3 Aug 222023 Q1 Earnings call transcript