CIRRUS LOGIC, INC. Q3 FY2025 earnings call

• Long-term strategy is based on three principles: maintaining leadership in core smartphone audio, expanding HPMS functionality, and leveraging expertise into new markets.
• In flagship smartphone audio, latest generation custom-boosted amplifier and 22-nanometer smart codec began shipping in recent smartphones, enhancing power efficiency and audio quality.
• Progress in HPMS includes continued success of camera controller product line, with more favorable mix of smartphones including these controllers, and ongoing R&D in battery and power areas.
• In new markets, progress in laptop market with audio solutions featured in Intel Arrow Lake reference design, and sampling of next-generation PC amplifier and codec; also sampling timing products for automotive and professional audio applications with early customer interest.

In Q3 FY2025, Cirrus Logic delivered revenue of $555.7 million, which was above the top end of the guidance range. Non-GAAP gross profit was $298.1 million with a non-GAAP gross margin of 53.6%. On a sequential basis, revenue was up 3% due to higher smartphone unit volumes. Year-over-year, sales were down 10% primarily due to lower smartphone unit volumes, but offset by increased revenue from the latest generation product.

• Q4 FY2025 revenue expected in range of $350 million to $410 million.
• GAAP gross margin expected to range from 51% to 53%.
• Non-GAAP operating expense expected to range from $119 million to $125 million.
• FY2025 non-GAAP tax rate expected to be approximately 22% to 24%, unchanged from previous guidance.

Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from projections. Refer to the press release, shareholder letter, and SEC filings for additional discussion of risk factors that could cause actual results to differ materially from current expectations.

Q: Tore Svanberg asked about leveraging MEMS IP for timing business and calendar 2026 growth.

A: John Forsyth responded that timing business is new IP, long-term project, and there are favorable tailwinds in smartphone camera content growth and laptop momentum.

Q: Thomas O'Malley inquired about gross margin drivers and mix shift into March quarter.

A: John Forsyth said gross margin is a function of supply chain costs and product mix, and no significant mix shift seen from December quarter to March quarter.

Q: David Williams asked about gross margin drivers and laptop market size.

A: John Forsyth discussed gross margin drivers and said laptop market is large with opportunity for growth, expecting revenue ramp in PC space.

Q: Christopher Rolland asked about HPMS parity and power R&D.

A: John Forsyth stated HPMS is a large opportunity, and power R&D is ongoing with IP in test silicon but still some way to revenue ramp.

Q: Gary Mobley asked about customer configurations and Android market.

A: John Forsyth talked about opportunities in novel form factors and Android market being opportunistic with existing IP.

Q: Tore Svanberg followed up on SG&A and new markets.

A: John Forsyth said SG&A level is comfortable and not expected to significantly change with new markets