CRUS - Earnings call 2 2024 | Cirrus Logic, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Second Quarter Fiscal Year 2024 Financial Results Q&A session. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Mr. begin. may you Heffernan,

Chelsea Heffernan

good and afternoon. you, Thank

today's Joining Logic's Financial John Cirrus is and me Officer. Chief Chief on President Nathamuni, Executive Forsyth, Venk call Officer; and

Today, earnings 'XX. are the The announced letter discussing Q&A Time the at session results, all quarter the shareholder p.m. company's the webcast financial website. results this company's second year at financial release, Investor for we fiscal of our approximately X:XX press available our Relations Eastern of

analysts covering This company. feature call from the will our questions

Additionally, certain the will measures website. on of the results earnings comparable and guidance discuss our and financial non-GAAP in directly release, this we on non-GAAP company's include are GAAP Investor measures call included available measures to these items. Relations will their most that are exclude Reconciliations all

we differ during that as By and from risks any may projections that a subject that or statements update to new or and uncertainties providing result projections statements any otherwise. information, note company this or revise results developments whether other materially are forward-looking actual make expressly forward-looking Please disclaims the obligation to to this of projections. may cause session,

to the today, are website, and the with on Commission. the press shareholder Exchange which well Logic Form letter and corporate the issued Cirrus XX-K latest registered filings release available the as refer other Please as Securities and

could results differ to current actual factors cause additional discussion of that risk For materially from expectations.

to call the I'd over John. like turn to Now

John Forsyth

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

end million, release Cirrus top of delivered the the quarter 'XX, second the the Logic guidance in in for press $XXX.X of of seen that Chelsea our you've to, referred quarter. As revenue fiscal near

calls. before results detail. prior on last the have call to the I'll Venk quarter the over moment, on like that to regarding progress to But discuss hand color in those get to we outlined that during some I'd that, In made strategy on provide the greater we I a

And system customer. to audio. the the in our priority we're boosted it about customer, Our silicon of our first custom leadership this next-generation our first received Like quarter, the sampled strategic smartphone is performance, smart step excited we and will deliver. remain amplifier XX-nanometer other represents that the Alongside a codec first on and applications. that for we which with key track cost audio sensing our significant efficiency product, processing forward signal and it improvements

Both of customers coming calendar business, audio components next schedule anticipate audio more and products to and year. half on side codec devices the market introduced products, these flagship had we general the the amplifier introduced be we our be quarter, featuring of are introduced In of multiple using our our first the devices new the smartphone this in year. to

the Turning now our strategy. second pillar of to

continue front shipments broaden in our ahead our camera Our ramping goal a controller of to is latest high-performance included on content smartphones. in to QX product this Progress mixed-signal customer's of launch.

Once products launch, again, area. stand to we in saw in are this enable as that the outstanding innovations help deliver and we differentiating customer our out key our proud that feature cameras product a

camera the exceptionally partnering We future. relationship products the and space, with on in in to our maintain an exciting engineering customer further continue close anticipate

began Beyond enhance we portfolio battery that introduced overall device the been and investing camera, we in control health and fiscal property performance technologies new expanding have that aims monitoring, of intellectual also that in conversion to 'XX. the the power with

further about revenue. areas our diversification represent the for and excited potential be growth to long-term of continue We these

soonest. the coming talked principally to focus third beyond about smartphones. strategy The laptop our and is element into given our is our expanding that applications it see here, space where efforts I've new fruition we the of markets market on

engaged adoption laptop plan There driving favorable our innings with OEMs, of those the the shipping are content are OEMs we of several still the for While in this X in design models. actively trends laptop win each today, opportunities next-generation of early for we same in our top products space. are are strategic and on market, we this

First, not focus a the OEMs. for high-quality laptop most which post-pandemic been audio, area has for historically desire

for creates power a lighter desire for and greater for need for audio and devices. bring track fanless constraints where than better Second, efficiency the mechanical for rather desire thermal designs That the beds, thinner amplification a ever haptic and demand conversion.

and an is SoundWire have product Today, we the towards previously, for creates their customers. architectural about audio evolution which to opportunity Finally, to excellent that sampling architectures spoken we've their rethink OEMs there partners.

customer the We great design in participation we seeing are interest. have SoundWire-compatible reference and from Intel

momentum these opportunities. for take revenue, be it meaningful we While that time continue will to to to through flow about some excited

As of this be can possible what an the of at market. end example higher

initial for we X including of shipments and that content. high-end silicon, Cirrus of multiple the quarter, haptic resulting pieces amplifiers, a features drivers codec, several model laptop began During in dollars a multiple Logic

We device and this increase Logic over believe continue to content opportunity both per is share market where market has to a time. Cirrus an

automotive, are our market, investing laptop in general also end the across audio, of products market large we imaging and the new markets. a services industrial which professional business, for customers Beyond number

performance, These consumption our offer believe in to years contributors enhancements, lower we important components the can they sustained new profitability feature and to come. differentiation power and be with improved

market to in future coming significant is diversification products the the year, our believe we and positioned momentum summary, company signal expand content. building with in pipeline high-performance well the opportunities efforts the new In our for for mixed

fiscal of to with And financial call provide over third for let well overview the to the our me as our results guidance an for 'XX that, as Venk turn QX now quarter.

Venkatesh Nathamuni

into Fiscal second million, is of our start top $XXX.X higher-than-expected end the I'll Good shipping near Thank which guidance to with you, due range smartphones. for demand was products fiscal John. results. afternoon, revenue our second quarter quarter everyone.

revenue Revenue was up smartphones a products. launches. reduction well in XX%, as components of general weakness as primarily XX% with which quarter-over-quarter, On shipping associated by higher decreased volumes in smartphone basis, driven a year-over-year sales market continued new reflects into

points, which high end to range freight XX gross Non-GAAP gross the guidance reflecting non-GAAP margin the in quarter costs, basis profit is costs. was in was and the margin. lower million we a had gross to supply basis, sequential a due chain above $XXX margin largely reduction of provided. On Turning XX.X%, increased gross

a less increased by lower points offset On XXX product basis, inventory and favorable a to by reserves, due chain partially basis supply mix. year-over-year gross margin costs

During material impact. partner this disposition the key issue collaboration quarter, supply was our we in completed the and that close mixed-signal disposition associated We of new as resolving wafers high-performance ship anticipated, a work and financial this have a did with expected customer chain in not product to the with previously year.

OpEx close to the flat and the range discretionary quarter operating to development the expenses. end mostly of in low roughly Turning well Non-GAAP $XXX.X to as guidance product was lower due spending. as million, sequentially timing

the current to will We especially expenses, control continue environment. given discretionary

was per through the $XXX.X second income in the the revenue lower-than-expected million million operating And $X.XX quarter second the line. Non-GAAP bottom higher-than-expected or P&L, of quarter or operating gross revenue. the XX.X% lastly, on to well was $XXX.X share in net income expense non-GAAP flowed and the as as as margin

turn balance now me Let to the sheet.

million and strong second with Our balance approximately remain $XXX.X equivalents. cash we fiscal of quarter sheet continues cash to ended the 'XX in and

support quarter. stock balance seasonal cash repurchase the quarter we inventory prior used during to product $XX.X and as was ending the Our to million from built cash down launches

$XXX We like our remains credit on a to facility. we outstanding. and noted million sheet have our position undrawn solid no strong balance I'd debt to And as reiterate that additionally, cash no in continue revolver have debt. with prior quarters,

to inventory. now Turning

long-term for we've As our our indicated been support wafer we to prior commitments fulfill quarters, well as product purchase GlobalFoundries. inventory with seasonal capacity in building launches as agreement

'XX. As million, in a up result, was inventory $XXX QX $XXX.X million from

declined inventory days days ended of prior XXX XX and inventory, days days the quarter. However, from XXX of quarter with we approximately the sequentially down in

and of September expect inventory quarter down to fiscal ahead, inventory support we the the both ongoing 'XX, inventory Looking as decline the days in product dollars seasonal to draw QX we from ramps.

we demand elevated remain demand meet to manage anticipated inventory our current point to the QX this product levels commitments, through fulfilling been purchase obligations. our fiscal balance continue have as inventory year. customer inventory of to expect for high actively we fiscal to while expect position fiscal wafer we 'XX purchase We'll and the year While

now free million, quarter, roughly the minus Turning cash the of quarter Cash in flow. was September million in for CapEx $X.X in to flow operations $XX.X was cash X%. resulting used and

period September roughly quarter, was the margin cash For in X%. the flow free ending XX-month

shares the XXX,XXX common share price of repurchase On front, at buyback average an to of in QX, approximately our utilized $XX.X we million stock $XX.XX.

$XX.X 'XX, authorization. $XX.XX 'XX, under As share share had rule of the $XXX repurchase average we QX to of roughly of fiscal we million million QX price end at repurchase plan. XXX,XXX an our fiscal utilized Subsequent in XXbX-X remaining to shares a repurchase

to a shareholders the we long-term capital in the form going continue And stock now forward. on to will return expect believe repurchases, to benefit provide We to guidance. which of

million QX and For margin expect of revenue expect we fiscal XX%. to the million, to 'XX, of range range $XXX to in gross we from XX% $XXX

is sequentially expense variable to to expected operating as up million week range of as higher $XXX primarily compensation. of additional to due Non-GAAP salaries an million, $XXX in be well the

is will year of XX a third year, fiscal fiscal weeks typical and a span XX-week XXXX fiscal XX reminder, the As quarter instead our weeks.

but to operating in control discretionary product drive perspective, invest Overall, from to strategically expense long-term we'll development spending continue our an growth.

our lower previously year. impacted rate tax tax R&D this foreign will credits our expense fiscal by continue unfavorably discussed, the we to capitalized XXXX be front, expected, effective be as On as will non-GAAP and tax

to be quarter's to fiscal approximately Our prior rate our non-GAAP expected XX% XX% guidance. XXXX is with tax consistent

will over R&D purposes. amortized continue additional We impact of to capitalized for years less that time unfavorable expenses become are as anticipate the of tax R&D

to results. a strong well we closing, had fiscal In these 'XX we deliver as executed QX

intense our understand will and to while relationship. to to the accordance we the both forward, customer, continue best enable is Cirrus on company business we the Logic policy, term. in revenue largest over related with finally, long there And company we'll discuss grow about specifics Going to not our focus profitability interest opportunities

that, turn to session. With start to let Q&A now Chelsea the the call me

Chelsea Heffernan

Venk. Thanks,

Instructions] now We we take Operator, of portion questions. [Operator now Q&A call. the to are ready start will . the earnings

Operator

line question [Operator of comes the Your first Instructions] Matthew. Ramsay from

Matthew Ramsay

and with lot the do now bit. to going there's the is what CoPilot time more and in and notebook long of with there's Apple emergence going shaking of what the MX from with architecture on obviously the done a Microsoft first -- has share MX time perspective, a market up John, the and in ecosystem for sort an a

sort at of been that hinting guys And space. opportunities have in you

company. in contrast laptops market interested I'm smartphones for versus your what market and the seen is Android that and sort the of you've to to So what Windows in compare

equally are opportunities You market? ARM a And folks obviously the and have is your Intel gaining Windows the legit your do but of really notebook other part of really, customer like have audio share? like on sort opportunities feel you with in Or areas strong? platforms dependent there, and you largest and it strong relationship do

John Forsyth

you, I Thank observations. with your Matt. agree

I And in it think market, really a of us there the laptop us way specifically again are adoption. think that hasn't dynamics number interesting quite there customer market I in long been interesting time. for make us gain help this that a multiple that will are drivers for and a

we across to the relationships great relationship To new customer with with drive that and referred And specifically, Intel market. answer helping engagement products around have. design have your presence customers really we our the side the laptop in Windows I of earlier, our is to question the reference that Intel

feel we laptops. leaders key to regards market in position our good with the we're with very engagement So Windows in a

around each to, X overall in market. laptop X designs. OEMs Today, of we're future I mentioned, with OEMs we're as And the the those shipping engaged top

for So on lots which we're audio audio, little of some opportunity more those behind right but there. and, the that. and tend now great very conversations to coming including be us. focused extent, products, haptics also are a products excited to about But haptic power And

to in no ARM. way it's And limited

In say to I for degree fact, necessity. creates and looking potentially that's systems it of opportunity integrating space time. start just more additional which is us in ARM-based not the I we the especially the experience architecturally, think notebooks with a ARM-based a given more into and have would smartphone tailwind advent ARM over smartphones, like but the SoCs,

Matthew Ramsay

John.

think I content the your it and year sort my resolution question, of good as guys comments you didn't ship to this wanted hear product of the I that was As ask, follow-up the thought. to on

the you and fits acquisition not. sometimes had Qualcomm I Wolfson in Android into and the when these I big developed wanted into kind "break for some MediaTek technology market. made with push Android the its opportunities it audio sometimes and of to with that to the applicability you ask a bit of you mean was the about guys and starts tried and haptic and [indiscernible] those IP push bundle and markets in and successful, to

if strong environment -- a market wonder providers, you opportunity an are go the have Android you TAM you in there's have around haptics, have -- they is there at and Or But Android? look the for solutions? haptics the I if smartphone could technology, arena, SoC that you if do new the into this and

John Forsyth

into that Thank to you, iOS adoption it same extent. has haptic not shipping every haptics Matt. different flagship story from are In Android been of phones. today world and haptics, we the somewhat the in The values OEM Android

tiers. as support And less OEMs begin to seen that there's perhaps for was bit But to us comfortable given there, that's and a are go think into down sockets. flagship higher devices, appreciation in so the haptics probably with, the high-quality but at our a tended haptics limited. headwind SAM designs I platform the comes somewhat high-quality cost for long-term it putting key We've to they win and and a of flagship

say with to I us that. continue to there we'll and haptics opportunity phones the serving that do certainly continues, for flagship would aim

Operator

the Question from of Christopher comes Rolland. line

Christopher Rolland

going I want come the guess, done first where talk Is of all, customer play? with Or you're does them that us to behind commitments ramp. as And this is are levels your into to at supply about this point balance be? inventory wafer well? that can once you

Venkatesh Nathamuni

my the of last we thanks indicated couple prepared in to balance that as terms to supply to had our in fulfill with building for come just commitments the quarters the we to was our Chris, that question. inventory Yes, both have had of partner. I the Yes, been the remarks,

also in the to. we of ramp that alluded But addition, products the new

of -- you in much a X were and last X, these as inventory recall, pretty pretty constrained Now may standpoint living existence. to hand-to-mouth from prior quarters, we a the position

we product anticipation of So to lamps. wanted build inventory these in

that quarter, and we a And the we in expecting see expect is are mentioned QX QX, from be quarter, to was meaningful call which the as reduction what current it on inventory fiscal high point. earlier, I at we'll the last

of Now have ahead, still have next obviously, but also to we purchase to products see supply we demand with commitments the such. set terms reasonable and the in looking of that requirements some our partner, we meet

will be -- we will So carefully that it something monitor.

for the But you've inventory going quarters, in it to seen, quarter we'll just down As we have substantially time. path X few the that be pretty we at and forward. come expect last better substantially guide a

do be our quarter. about year, And relates inventory to be As prior we down X.Xx in give you to expect to goal from where to it some this that's and turns the current last an we just inventory in terms quarter, perspective, from fiscal of ultimate at we perspective. inventory, want were

Christopher Rolland

that. talk the It talking you you I coming the following in could assume first year. ramps maybe but you over that some maybe the And capture half, sounded like to opportunity up the of think in next can Android -- Excellent. just some Where needle-moving revenue? you latter, the kind have audio, about would

think had Where ramping? the telephoto you to architecture would haptics I customer's you're products think particularly Android? that some ever for you products anyone efficiency camera said there. are opportunities how trying for opportunities lead opportunities, you are needle-moving Do as ramp copy well? battery all your

John Forsyth

China-based American-based So OEMs, We very a at specifically Korean OEMs our splits North business and say buckets. for have the Xiaomi, I'd look and good and we then if market us the Meizu. Android. There's business -- there's you And around value with China-based the OEMs. there. Vivo still into really much X

us. more think It's long to But has business. do that, that a headwinds term difficult for environment we some environment become

other great at with Harrison relationships side Android, bucket, of investment. not those we of other the got area then it's So we've look OEMs. the the If a major

invest to continue future and those support in We to designs.

is when or business than the that, in not future. excited as laptop up is bigger far our about potential But Samsung We was the for us opportunity. last further think bigger was feel year. large further this I as I -- of the opportunity with something year been Android and out, good as whole look supporting them think about has a we the that so we're very

look we X right laptop a now. market content greenfield much see opportunity expanding see, we a space business share can our laptop our few business. years of And we where have, and we in where scenario exceeds the that's as more think, I out, that So Android for gaining can

the that's So greater and of focus it area when customer new our comes product engagement development. to

Operator

Your comes Tore of next question from the line Svanberg.

Tore Svanberg

spread this And light on execution was way in commitment results, for great of Yes. especially that the on getting side. the through your congrats product purchase

mentioned next I them XX-nanometer had introducing the word about a year. John, products question the

then in does we'll that revenues see sampling calendar after? and the will So be 'XX, mean that they potential year

John Forsyth

are opening the door for you sampling Thank clarification. today. to They that

today. we're a performing customers' beautifully. that they're it, It's the smart XX-nanometer The next talking hands. marvelous that product, in of calendar particular, very introduction towards about. Sorry, we a and market with year. is back sampling our the product codec we're half means in working are It's That's in happy which

Tore Svanberg

the timing bigger the Very is this and already as happen more that next good. in as calendar far or could X And far 'XX laptop, sort year? ramp. understand that as 'XX But content opportunity in you're as I story? today. that of Or Is a top something

John Forsyth

referred need number and the moving we have right in start the Yes, that given to have revenue overall significant right that, of Obviously, our development also the to important And is needle that's of great products, designs a the a the enough question. we on fact to but development them right designs being where have today. I've it's in revenue now.

poster This what that of we So market can try coming I in mentioned, we've anticipate a to frame remarks, terms in could my child broad for I'll the got prepared which I as device to a you we're that I here. happen sense referred year, get fiscal guess you about. the of within designs 'XX, very proud to remainder including number of so

of in that much shipping means fiscal the anything definition, during space, half early the fiscal part year, second to laptop going and really of in year by the practice contribute But calendar isn't next most year. likely the the in in current

think 'XX So in of fiscal minimal. of laptops pretty the as being our contribution

coming -- move contribute now, as 'XX. to start fiscal are into which market will designs those revenue we However, to there to

range us more production, 'XX. fiscal we of in fiscal 'XX start as going So in in of likely seeing the anticipate moderate millions current putting design the those a revenue wins low step-up of into tens of

today what's customer I of lead platforms to remarks, happening 'XX. the the around lot that A early in that's prepared reference calendar mentioned will launching product

So and we 'XX meaningful anticipate would that, than steeper that lead more beyond. growth revenue would likely to fiscal in and

And potential I a If we how out the sense Android -- see stayed to think are mentioned, the as business. we give the you laptop to overtake but know opportunity. revenues Android for beyond we that break then our it about we flat, such, I previously, don't as of that, somewhere

Operator

Curtis. question line [Operator Instructions] the Next from comes of Blayne

Blayne Curtis

a is I wanted HPMS. I in I ask too a guess diversification don't mentioning you've to you, language quarters but in language, efforts little the row in several the read much been different.

You some battery. power said in there's interest and customer

Can you the model? we kind maybe about think any impacting as to maybe that and efforts just diversification talk rough when timing about should of the

John Forsyth

that's have customer certainly power Blayne, and the we Yes, around interest, space. principally,

technology. So believe significantly the really we sits battery area that stuff differentiated an have that is around we

at that most silicon part for IP this the have We point. in

translating demonstrate into to that so program we're customers and able design about excited specific there, to design IP wins been we've and awards that on. So and

obviously some next what there are the out. a come going It's beyond that got before this that we've opportunities. would that coming see I but but still on believe meaningful we limit time to products we fruition, to likely call, little audio That's year. be further I'm say

in we're So those. investing certainly securing

Blayne Curtis

for impacts for March And thoughts a wanted Venk. whether any seasonality don't with I then OpEx, to Obviously, concentration, I for seasonality. matters weeks question on know the high March. revenue. customer ask maybe on But that XX such

Venkatesh Nathamuni

revenue early I into the expenses, and extra But of just terms to and we kind have both guidance. the March. mean it's December I of talk week do about mean quarter, too factored you're that's Yes. of current in right. that

March, -- to big main Now is a what obviously, of happens customers' what happens in function the top product. our

between forward. it that's the a So I terms think quarter this different March magnitude December see But But and typical what to quantify time. decline. we'll that have of We'll there's it. at the a on time we'll just quarter of in going seasonal just seasonality, sequence right reserve around I the anything the it is judgment is don't determine

Chelsea Heffernan

this And question. last our will be

Operator

of the question last Ananda Our comes Baruah. from line

Ananda Baruah

then would it's back a if I guess questions. going If your there have also. John, would that appreciate were XXXX. little perhaps of notice PC impact I to that could the an be anticipate you a in thought a to broadly that well? seeing adoption we sort to the business happen dynamic PCs, -- you of may I PC the as quick follow-up bit And

John Forsyth

in market? Sorry, are you PC headwinds referring the to

Ananda Baruah

Tailwinds the in of PC a PC cycle. market. A Yes. bit

John Forsyth

I design although momentum. building we're guess, yes, still

between we benefit expect AB serious do audio in products logic competitive laptops that them versus and certainly to we comparison not. would have haptics from do So when think that an that And that. you

striking. meaningful The what it's difference of a day experience. difference. think we're PC is We're It's the and very for night proud we there, very, really and doing really really

benefit that we're pipeline building from still our today. certainly if So I to our next even year, momentum hope would in design

Ananda Baruah

of a XX% opportunities and spoke their they're in talking And about on HP similar in AI-enabled of -- then the what next you Yes few PCs eventually the probably moments PC Dell of like ago. ballpark. laptops that their the shipping years, processing. is about calling handful is

like folks So that.

thought process? that Do that incremental -- with AI opportunity captured laptops. kind that kind PCs provide in would that -- with that AI Or of that content in of is kind captured Is you of and capability already your AI -- enablement.

John Forsyth

lot our quite the may of We current laptop-focused course, that It product power. know, that it how of intersects sure be not I'm portfolio. burn AI cases a with typical does. use

a the to to system anything be So do power we going benefit. increase is obviously efficiency across can

and more I us of is what for interesting user to think But likely is laptops vector experience the focal more more makes that I innovation more of general. a broadly for and in anything point say a improving would benefit

Chelsea Heffernan

we the that, I now back over call his to Q&A And will with for session. final turn John remarks. end will the

John Forsyth

Chelsea. you, Thank

summary, toward the each made solid the key across and of of of delivered the strategy. Cirrus in end Logic revenue progress So X guidance quarter our areas top for our second

We're about thank your in and opportunities you excited the for interest continued us, Cirrus front of in Logic. we

disciplined In like the innovation bringing enables addition, us challenges also I'd and commitment to strong whose to thank results. Logic execution to team. our Cirrus what that customers to is entire to ultimately bear on the addressing deliver are

I'd note to website today. the investor close, we check participating Thank all in Francisco. we that Before be like X also on Please details. joining our for Conference San for call December you will our Barclays the in

Operator

call. conference today's concludes This

disconnect. You may now

Cirrus Logic (CRUS) 2 Nov 232024 Q2 Earnings call transcript