Cirrus Logic Reports Fiscal Second Quarter Revenue of $540.6 Million

Cirrus Logic, Inc. (Nasdaq: CRUS) today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the second quarter fiscal year 2023, which ended September 24, 2022, as well as the company’s current business outlook.

“Cirrus Logic reported Q2 revenue of $540.6 million, marking the fifth consecutive quarter in which we have set a revenue record for the corresponding fiscal period. Results were well above the top end of our guidance, as we benefited from higher unit volumes and high-performance mixed-signal content gains in smartphones,” said John Forsyth, Cirrus Logic president and chief executive officer. “In addition to these strong results, during the quarter we also made excellent progress in our audio product lines and in our strategy of expansion through adjacent high-performance mixed-signal applications. We furthered the development of our next-generation flagship smartphone audio components, continued to build momentum with our audio products in additional markets, and saw the continued growth in value of our camera controller solutions. With an extensive product portfolio and an outstanding roadmap, we believe we are positioned well to capitalize on opportunities that we believe will drive growth in the years to come.”

Reported Financial Results – Second Quarter FY23

• Revenue of $540.6 million;
• GAAP and non-GAAP gross margin of 50.2 percent;
• GAAP operating expenses of $155.1 million and non-GAAP operating expenses of $123.9 million; and
• GAAP earnings per share of $1.52 and non-GAAP earnings per share of $1.99.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Third Quarter FY23

• Revenue is expected to range between $520 million and $580 million;
• GAAP gross margin is forecasted to be between 49 percent and 51 percent; and
• Combined GAAP R&D and SG&A expenses are anticipated to range between $153 million and $159 million, including approximately $21 million in stock-based compensation expense, $9 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling [phone], or toll-free at [phone] (Access Code: 95424).

Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, effective tax rate, free cash flow, and free cash flow margin. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about capitalizing on opportunities that we believe will drive growth in the years to come, and our estimates for the third quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially, and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S and overseas; the level and timing of orders and shipments during the third quarter of fiscal year 2023, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 26, 2022 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary Financial Data Follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data; unaudited)
	Three Months Ended												Six Months Ended
	Sep. 24,				Jun. 25,				Sep. 25,				Sep. 24,				Sep. 25,
	2022				2022				2021				2022				2021
	Q2'23				Q1'23				Q2'22				Q2'23				Q2'22
Audio	$	337,811			$	254,496			$	300,775			$	592,307			$	518,130
High-Performance Mixed-Signal		202,763				139,143				165,111				341,906				225,009
Net sales		540,574				393,639				465,886				934,213				743,139
Cost of sales		269,288				191,005				230,442				460,293				367,749
Gross profit		271,286				202,634				235,444				473,920				375,390
Gross margin		50.2	%			51.5	%			50.5	%			50.7	%			50.5	%
Research and development		115,471				109,716				102,116				225,187				187,812
Selling, general and administrative		39,598				38,642				38,132				78,240				73,279
Total operating expenses		155,069				148,358				140,248				303,427				261,091
Income from operations		116,217				54,276				95,196				170,493				114,299
Interest income		1,285				305				35				1,590				796
Other income		295				506				1,859				801				1,617
Income before income taxes		117,797				55,087				97,090				172,884				116,712
Provision for income taxes		30,609				15,380				11,994				45,989				14,407
Net income	$	87,188			$	39,707			$	85,096			$	126,895			$	102,305
Basic earnings per share:	$	1.56			$	0.71			$	1.48			$	2.27			$	1.78
Diluted earnings per share:	$	1.52			$	0.69			$	1.43			$	2.20			$	1.72
Weighted average number of shares:
Basic		55,726				56,277				57,364				56,002				57,473
Diluted		57,418				57,804				59,451				57,620				59,485
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(not prepared in accordance with GAAP)
Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.
	Three Months Ended												Six Months Ended
	Sep. 24,				Jun. 25,				Sep. 25,				Sep. 24,				Sep. 25,
	2022				2022				2021				2022				2021
Net Income Reconciliation	Q2'23				Q1'23				Q2'22				Q2'23				Q2'22
GAAP Net Income	$	87,188			$	39,707			$	85,096			$	126,895			$	102,305
Amortization of acquisition intangibles		7,787				7,835				7,054				15,622				10,052
Stock-based compensation expense		20,483				18,138				16,551				38,621				31,535
Acquisition-related costs		3,164				3,164				5,834				6,328				5,834
Adjustment to income taxes		(4,135	)			(4,300	)			(6,045	)			(8,435	)			(8,994	)
Non-GAAP Net Income	$	114,487			$	64,544			$	108,490			$	179,031			$	140,732
Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	1.52			$	0.69			$	1.43			$	2.20			$	1.72
Effect of Amortization of acquisition intangibles		0.14				0.14				0.12				0.27				0.17
Effect of Stock-based compensation expense		0.35				0.31				0.28				0.67				0.53
Effect of Acquisition-related costs		0.05				0.05				0.09				0.11				0.09
Effect of Adjustment to income taxes		(0.07	)			(0.07	)			(0.10	)			(0.14	)			(0.14	)
Non-GAAP Diluted earnings per share	$	1.99			$	1.12			$	1.82			$	3.11			$	2.37
Operating Income Reconciliation
GAAP Operating Income	$	116,217			$	54,276			$	95,196			$	170,493			$	114,299
GAAP Operating Profit		21.5	%			13.8	%			20.4	%			18.2	%			15.4	%
Amortization of acquisition intangibles		7,787				7,835				7,054				15,622				10,052
Stock-based compensation expense - COGS		312				277				272				589				518
Stock-based compensation expense - R&D		14,228				12,592				10,496				26,820				20,108
Stock-based compensation expense - SG&A		5,943				5,269				5,783				11,212				10,909
Acquisition-related costs		3,164				3,164				5,834				6,328				5,834
Non-GAAP Operating Income	$	147,651			$	83,413			$	124,635			$	231,064			$	161,720
Non-GAAP Operating Profit		27.3	%			21.2	%			26.8	%			24.7	%			21.8	%
Operating Expense Reconciliation
GAAP Operating Expenses	$	155,069			$	148,358			$	140,248			$	303,427			$	261,091
Amortization of acquisition intangibles		(7,787	)			(7,835	)			(7,054	)			(15,622	)			(10,052	)
Stock-based compensation expense - R&D		(14,228	)			(12,592	)			(10,496	)			(26,820	)			(20,108	)
Stock-based compensation expense - SG&A		(5,943	)			(5,269	)			(5,783	)			(11,212	)			(10,909	)
Acquisition-related costs		(3,164	)			(3,164	)			(2,373	)			(6,328	)			(2,373	)
Non-GAAP Operating Expenses	$	123,947			$	119,498			$	114,542			$	243,445			$	217,649
Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	271,286			$	202,634			$	235,444			$	473,920			$	375,390
GAAP Gross Margin		50.2	%			51.5	%			50.5	%			50.7	%			50.5	%
Acquisition-related costs		—				—				3,461				—				3,461
Stock-based compensation expense - COGS		312				277				272				589				518
Non-GAAP Gross Profit	$	271,598			$	202,911			$	239,177			$	474,509			$	379,369
Non-GAAP Gross Margin		50.2	%			51.5	%			51.3	%			50.8	%			51.0	%
Effective Tax Rate Reconciliation
GAAP Tax Expense	$	30,609			$	15,380			$	11,994			$	45,989			$	14,407
GAAP Effective Tax Rate		26.0	%			27.9	%			12.4	%			26.6	%			12.3	%
Adjustments to income taxes		4,135				4,300				6,045				8,435				8,994
Non-GAAP Tax Expense	$	34,744			$	19,680			$	18,039			$	54,424			$	23,401
Non-GAAP Effective Tax Rate		23.3	%			23.4	%			14.3	%			23.3	%			14.3	%
Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.53			$	0.27			$	0.20			$	0.80			$	0.24
Adjustments to income taxes		0.07				0.07				0.10				0.14				0.14
Non-GAAP Tax Expense	$	0.60			$	0.34			$	0.30			$	0.94			$	0.38

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
		Sep. 24,				Mar. 26,				Sep. 25,
		2022				2022				2021
ASSETS
Current assets
Cash and cash equivalents		$	355,043			$	369,814			$	386,741
Marketable securities			23,869				10,601				8,152
Accounts receivable, net			304,546				240,264				280,967
Inventories			164,571				138,436				188,360
Other current assets			108,538				80,900				84,836
Total current Assets			956,567				840,015				949,056
Long-term marketable securities			49,013				63,749				67,726
Right-of-use lease assets			162,859				171,003				129,298
Property and equipment, net			158,722				157,077				159,480
Intangibles, net			141,909				158,145				174,852
Goodwill			435,936				435,791				437,783
Deferred tax asset			13,094				11,068				10,073
Long-term prepaid wafers			174,787				195,000				195,000
Other assets			71,180				91,552				102,892
Total assets		$	2,164,067			$	2,123,400			$	2,226,160
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	118,000			$	115,417			$	386,699
Accrued salaries and benefits			59,140				65,261				54,919
Lease liability			13,583				14,680				14,359
Acquisition-related liabilities			45,984				30,964				—
Other accrued liabilities			45,658				38,461				44,404
Total current liabilities			282,365				264,783				500,381
Non-current lease liability			152,294				163,162				122,815
Non-current income taxes			65,255				73,383				79,727
Long-term acquisition-related liabilities			—				8,692				33,329
Other long-term liabilities			9,539				13,563				21,818
Total long-term liabilities			227,088				258,800				257,689
Stockholders' equity:
Capital stock			1,618,177				1,578,427				1,533,557
Accumulated earnings (deficit)			40,927				23,435				(65,672	)
Accumulated other comprehensive income (loss)			(4,490	)			(2,045	)			205
Total stockholders' equity			1,654,614				1,599,817				1,468,090
Total liabilities and stockholders' equity		$	2,164,067			$	2,123,400			$	2,226,160
Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
		Three Months Ended
		Sep. 24,				Sep. 25,
		2022				2021
		Q2'23				Q2'22
Cash flows from operating activities:
Net income		$	87,188			$	85,096
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			17,219				15,812
Stock-based compensation expense			20,483				16,551
Deferred income taxes			1,404				294
Loss on retirement or write-off of long-lived assets			11				331
Other non-cash charges			86				92
Net change in operating assets and liabilities:
Accounts receivable, net			(98,274	)			(137,707	)
Inventories			9,799				12,037
Prepaid wafers			—				(195,000	)
Other assets			(2,491	)			(94,911	)
Accounts payable and other accrued liabilities			14,229				302,681
Income taxes payable			(16,829	)			(9,432	)
Acquisition-related liabilities			3,164				33,329
Net cash provided by operating activities			35,989				29,173
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities			1,961				308,478
Purchases of available-for-sale marketable securities			(850	)			(14,194	)
Purchases of property, equipment and software			(10,211	)			(3,893	)
Investments in technology			(36	)			(2,034	)
Acquisition of business, net of cash obtained			—				(275,642	)
Net cash used in investing activities			(9,136	)			12,715
Cash flows from financing activities:
Debt issuance costs			—				(1,716	)
Issuance of common stock, net of shares withheld for taxes			1,011				2,457
Repurchase of stock to satisfy employee tax withholding obligations			(2,156	)			(1,013	)
Repurchase and retirement of common stock			(50,000	)			(40,002	)
Net cash used in financing activities			(51,145	)			(40,274	)
Net increase in cash and cash equivalents			(24,292	)			1,614
Cash and cash equivalents at beginning of period			379,335				385,127
Cash and cash equivalents at end of period		$	355,043			$	386,741
Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)
Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by (used in) operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.
		Twelve Months Ended				Three Months Ended
		Sep. 24,				Sep. 24,				Jun. 25,				Mar. 26,				Dec. 25,
		2022				2022				2022				2022				2021
		Q2'23				Q2'23				Q1'23				Q4'22				Q3'22
Net cash provided by (used in) operating activities (GAAP)		$	232,730			$	35,989			$	74,365			$	258,231			$	(135,855	)
Capital expenditures			(29,651	)			(10,247	)			(7,224	)			(8,456	)			(3,724	)
Free Cash Flow (Non-GAAP)		$	203,079			$	25,742			$	67,141			$	249,775			$	(139,579	)
Cash Flow from Operations as a Percentage of Revenue (GAAP)			12	%			7	%			19	%			53	%			(25	) %
Free Cash Flow Margin (Non-GAAP)			10	%			5	%			17	%			51	%			(25	) %

 

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The Cirrus Logic Stock at the time of publication of the news with a raise of +0,07 % to 67,17EUR on Nasdaq stock exchange (01. November 2022, 20:49 Uhr).