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CIRRUS LOGIC, INC. (CRUS)·Q3 2025 Earnings Summary

Executive Summary

  • CRUS delivered Q3 FY25 revenue of $555.7M, up 3% q/q and down 10% y/y, with GAAP/non-GAAP gross margin of 53.6%; revenue finished significantly above the top end of Q3 guidance on stronger-than-expected smartphone demand .
  • Gross margin expanded 140 bps q/q and 230 bps y/y on favorable mix (new content) and lower supply chain costs, achieving above long-run average margins; management highlighted mix and yield/test efficiency improvements as key drivers .
  • Q4 FY25 guidance: revenue $350–$410M, GAAP GM 51–53%, and non-GAAP opex $119–$125M (GAAP R&D+SG&A $141–$147M) .
  • Balance sheet/cash: $816.6M cash and investments, no debt; Q3 operating cash flow $218.6M, FCF $211.9M; $70.0M buybacks executed (678,768 shares at ~$103.18), with $154.1M remaining authorization .
  • Strategic traction: continued momentum in smartphones (latest custom boosted amp and first 22nm smart codec), growing laptop content (Intel Arrow Lake reference design; sampling next-gen PC amp/codec), and new timing products for auto/pro audio; CFO appointment announced (Jeff Woolard) .

What Went Well and What Went Wrong

  • What Went Well

    • “Revenue significantly above the top end of our guidance” on stronger smartphone shipments; new custom boosted amplifier and 22nm smart codec ramping in recent smartphones .
    • Gross margin expansion to 53.6% q/q and y/y on mix shift to higher-margin products and lower supply chain costs; operating profit 26.2% GAAP / 30.4% non-GAAP .
    • Laptop momentum: featured in Intel Arrow Lake reference design; sampling next-gen PC amp/codec; “we anticipate [these] will broaden our portfolio and address a wider range of the laptop market” .

  • What Went Wrong

    • Revenue declined 10% y/y due to lower smartphone unit volumes and fiscal calendar effects (FY24 53-week year; Q3 FY25 started one week later), partially offset by increased new-product revenue .
    • Inventory rose to $275.6M and is expected to increase and peak in 1H FY26 as CRUS fulfills demand and manages GF wafer purchase commitments .
    • Customer concentration remains high: one customer represented ~91% of revenue in Q3 FY25, underscoring concentration risk .

Financial Results

Performance (oldest → newest)

MetricQ3’24Q1’25Q2’25Q3’25
Revenue ($M)$618.984 $374.026 $541.857 $555.738
GAAP Gross Margin (%)51.3% 50.5% 52.2% 53.6%
GAAP Diluted EPS ($)$2.50 $0.76 $1.83 $2.11
Non-GAAP Diluted EPS ($)$2.89 $1.12 $2.25 $2.51

Q3 guidance vs actual

MetricPrior Guidance (Q3 FY25)Actual (Q3 FY25)Result
Revenue ($M)$480–$540 $555.7 Above range by $15.7M (beat)

Segment mix and product-line revenue (oldest → newest)

Segment Revenue ($M)Q3’24Q2’25Q3’25
Audio$378.597 $316.588 $346.272
High-Performance Mixed-Signal (HPMS)$240.387 $225.269 $209.466

Key KPIs

KPIQ3’25Context
Audio/HPMS Mix (%)62% / 38% Reflects smartphone audio leadership and HPMS diversification
Largest Customer Concentration~91% of revenue High concentration risk
Cash & Investments ($M)$816.6 No debt; $300M undrawn revolver
Operating Cash Flow ($M)$218.6 Q3 FY25
Free Cash Flow ($M)$211.9 Q3 FY25
Share Repurchases$70.0M (~678,768 shares at ~$103.18) $154.1M authorization remaining
Inventory ($M)$275.6 DoI ~98 days; expected to peak in 1H FY26

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY25N/A$350–$410M N/A
GAAP Gross MarginQ4 FY25N/A51%–53% N/A
GAAP R&D+SG&AQ4 FY25N/A$141–$147M N/A
Non-GAAP OpexQ4 FY25N/A$119–$125M N/A
Non-GAAP Tax RateFY25~22%–24% (unchanged) ~22%–24% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 FY25)Trend
Smartphone audio/contentQ1: Began ramp of custom boosted amp and first 22nm smart codec ahead of launches . Q2: Started shipping next-gen custom boosted amp and first 22nm smart codec in launched smartphones .Strong demand; these components ramped into recent smartphones; contributed to revenue/GM .Positive acceleration (content + mix) .
HPMS (camera, haptics, power)Q2: HPMS contributing; revenue near top of guide . Q1: Growth strategy to diversify into HPMS .More favorable mix of smartphones including CRUS camera controllers; continued investment in battery/power control and charging .Building pipeline; diversified growth opportunity .
Laptops (PC)Q1: Strong design activity; ramp in laptops; introduced data converters . Q2: Secured first high-volume mainstream design win; started shipping first power product .Featured in Intel Arrow Lake reference design; sampling next-gen PC amp/codec; content broadening; tracking “low tens of millions” FY25, ~2x in FY26 .Uptrend in design momentum and revenue trajectory .
Supply chain/costsNot explicitly highlighted Q1/Q2 in press releases.GM up q/q and y/y; lower supply chain costs and mix benefits; yield/test efficiency improvements .Improving margin structure .
Inventory/wafer commitmentsNot highlighted Q1/Q2.Inventory to increase and peak 1H FY26 due to demand fulfillment and GF wafer agreement .Near-term inventory build .
Customer concentrationNot highlighted Q1/Q2.One customer ~91% of revenue .Elevated concentration risk .
New markets (auto/pro audio timing)Q1: Introduced data converters for pro/industrial .Sampling timing products for auto/pro audio; long lead times; specified by at least one Tier 1 OEM (long-term) .Early-stage pipeline .

Management Commentary

  • “Cirrus Logic delivered revenue significantly above the top end of our guidance range… strong demand for our smartphone audio components, including our latest-generation custom boosted amplifier and first 22-nanometer smart codec.” – John Forsyth, CEO .
  • “Gross margin [increase]… mostly driven by a shift in mix toward higher margin products and… lower supply chain costs.” – Shareholder Letter .
  • “Our audio solutions were featured as part of the Intel Arrow Lake reference design… sampling our next-generation PC amplifier and codec” – CEO .
  • “Inventory will… peak in the first half of FY ’26 as we… manage our wafer purchase commitments [with] GlobalFoundries.” – Interim CFO .
  • “We continue to see significant potential to… grow [HPMS]… in cameras… battery and power… with a number of R&D programs underway.” – CEO .

Q&A Highlights

  • Timing products: New IP (not legacy MEMS); early customer interest in auto/pro audio; specified by at least one Tier 1, but revenue impact is several years out .
  • December quarter linearity/mix: Demand was sustained and slightly increased vs guidance; no pronounced mix shift into March noted .
  • Gross margin drivers: Mix and supply chain cost improvements post new-product ramp; efficiency gains in yield/test .
  • Laptop TAM and revenue path: Addressable ~200–220M units with ~half in relevant tiers; FY25 “low tens of millions,” roughly doubling in FY26 based on secured designs .
  • HPMS vs Audio over time: Long-term potential for HPMS to reach parity with Audio, but not within a year .
  • Android strategy: Opportunistic with limited incremental R&D; still winning flagship sockets in audio/haptics .
  • SG&A leverage: Comfortable at current level even as new markets pursued .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q3 FY25 and Q4 FY25 but could not due to vendor rate limits; thus, we cannot present Wall Street consensus comparisons. Values from S&P Global were unavailable at the time of this analysis (GetEstimates error: “Daily Request Limit Exceeded”).
  • As an anchor, CRUS beat company-issued Q3 revenue guidance (actual $555.7M vs $480–$540M guidance), implying a positive surprise vs internal expectations .

Key Takeaways for Investors

  • Positive surprise on top-line and margins: revenue beat above guidance and gross margin >53% signal favorable mix and efficiency scaling on new content; supports near-term earnings resilience .
  • Smartphone content story intact: custom boosted amp and 22nm codec are multi-generation, underpinning visibility and mix-led margin accretion .
  • Emerging growth vectors: PCs (Arrow Lake reference, new PC amp/codec sampling) and HPMS (camera, battery/power) point to multi-year diversification; FY26 PC revenue expected ~2x FY25 “low tens of millions,” contingent on demand .
  • Inventory build is planned: near-term working capital headwind as CRUS fulfills demand and manages GF wafer commitments; expect inventory peak in 1H FY26 .
  • Capital returns ongoing: strong cash generation with $211.9M FCF in Q3 and active buybacks ($70M), with $154.1M authorization remaining .
  • Concentration risk remains elevated (~91% with one customer), a key factor for valuation and risk management .
  • Management bench strengthened with new CFO appointment, bringing deep semi and M&A experience ahead of diversification push .

Appendix: Additional Q3 FY25 Disclosures

  • Cash and investments: $816.6M; no debt; $300M unused revolver .
  • Operating cash flow: $218.6M; FCF: $211.9M in Q3 .
  • Shareholder letter notes GM guidance for Q4 at 51–53% and non-GAAP opex $119–$125M .
  • CFO appointment press release (effective Feb 24, 2025) .