Cirrus Logic Reports Record Revenue of $619.0 Million for Fiscal Third Quarter
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 third quarter fiscal year 2024, which ended December 30, 2023, as well as the company’s current business outlook.
“Cirrus Logic delivered record revenue and earnings per share in the December quarter,” said John Forsyth, Cirrus Logic president and chief executive officer. “In addition to our outstanding financial results, we achieved key milestones in the production of our next-generation audio components while also making exciting advances in our process technology and foundry strategy. Furthermore, customer engagement with our laptop solutions was strong, and we made excellent progress on a number of R programs in our high-performance mixed-signal business. With a compelling roadmap of products and an amazing track record of execution, we believe we are well-positioned to grow long-term shareholder value.”
Reported Financial Results – Third Quarter FY24
Revenue of $619.0 million; GAAP gross margin of 51.3 percent and non-GAAP gross margin of 51.4 percent; GAAP operating expenses of $149.9 million and non-GAAP operating expenses of $125.6 million; GAAP earnings per share of $2.50 and non-GAAP earnings per share of $2.89; and Cash and cash equivalents balance of $587.0 million.A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.
Business Outlook – Fourth Quarter FY24
Revenue is expected to range between $290 million and $350 million; GAAP gross margin is expected to be between 49 percent and 51 percent; and Combined GAAP R and SG expenses are anticipated to range between $138 million and $144 million, including approximately $22 million in stock-based compensation expense and $2 million in amortization of acquisition intangibles, resulting in a non-GAAP operating expense range between $114 million and $120 million.Cirrus Logic will host a live Q session at 5 p.m. EST 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 (647) 362-9199 or toll-free at (800) 770-2030 (Access Code: 95424).
About 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 our ability to grow long-term shareholder value; and our estimates for the fourth quarter fiscal year 2024 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, and amortization of acquisition intangibles. 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 level and timing of orders and shipments during the fourth quarter of fiscal year 2024, customer cancellations of orders, or the failure to place orders consistent with forecasts; changes with respect to our current expectations of future smartphone unit volumes; any delays in the timing and/or success of customers’ new product ramps; and the risk factors listed in our Form 10-K for the year ended March 25, 2023 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
Nine Months Ended
Dec. 30,
Sep. 23,
Dec. 24,
Dec. 30,
Dec. 24,
2023
2023
2022
2023
2022
Q3'24
Q2'24
Q3'23
Q3'24
Q3'23
Audio
$
378,597
$
282,855
$
347,297
$
857,258
$
939,604
High-Performance Mixed-Signal
240,387
198,208
243,285
559,805
585,191
Net sales
618,984
481,063
590,582
1,417,063
1,524,795
Cost of sales
301,520
234,467
293,877
693,616
754,170
Gross profit
317,464
246,596
296,705
723,447
770,625
Gross margin
51.3
%
51.3
%
50.2
%
51.1
%
50.5
%
Research and development
112,672
104,205
118,063
323,092
343,250
Selling, general and administrative
37,604
34,323
37,262
107,306
115,502
Restructuring costs
(360
)
2,319
—
1,959
—
Total operating expenses
149,916
140,847
155,325
432,357
458,752
Income from operations
167,548
105,749
141,380
291,090
311,873
Interest income
4,889
3,729
2,777
13,218
4,367
Other expense
(337
)
(70
)
(3,716
)
(30
)
(2,915
)
Income before Income taxes
172,100
109,408
140,441
304,278
313,325
Provision for income taxes
33,377
34,001
36,964
74,548
82,953
Net income
$
138,723
$
75,407
$
103,477
$
229,730
$
230,372
Basic earnings per share
$
2.57
$
1.38
$
1.87
$
4.22
$
4.13
Diluted earnings per share:
$
2.50
$
1.34
$
1.83
$
4.09
$
4.02
Weighted average number of shares:
Basic
54,016
54,503
55,239
54,449
55,748
Diluted
55,592
56,278
56,583
56,160
57,280
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
Nine Months Ended
Dec. 30,
Sep. 23,
Dec. 24,
Dec. 30,
Dec. 24,
2023
2023
2022
2023
2022
Net Income Reconciliation
Q3'24
Q2'24
Q3'23
Q3'24
Q3'23
GAAP Net Income
$
138,723
$
75,407
$
103,477
$
229,730
$
230,372
Amortization of acquisition intangibles
1,972
2,170
8,807
6,312
24,429
Stock-based compensation expense
23,067
21,331
20,487
67,113
59,108
Restructuring costs
(360
)
2,319
—
1,959
—
Acquisition-related costs
—
939
3,176
4,105
9,504
Investment write off
—
—
2,746
—
2,746
Adjustment to income taxes
(2,769
)
(604
)
(2,936
)
(9,001
)
(11,371
)
Non-GAAP Net Income
$
160,633
$
101,562
$
135,757
$
300,218
$
314,788
Earnings Per Share Reconciliation
GAAP Diluted earnings per share
$
2.50
$
1.34
$
1.83
$
4.09
$
4.02
Effect of Amortization of acquisition intangibles
0.04
0.04
0.15
0.11
0.43
Effect of Stock-based compensation expense
0.41
0.38
0.36
1.20
1.03
Effect of Restructuring costs
(0.01
)
0.04
—
0.04
—
Effect of Acquisition-related costs
—
0.01
0.06
0.07
0.17
Effect of Investment write off
—
—
0.05
—
0.05
Effect of Adjustment to income taxes
(0.05
)
(0.01
)
(0.05
)
(0.16
)
(0.20
)
Non-GAAP Diluted earnings per share
$
2.89
$
1.80
$
2.40
$
5.35
$
5.50
Operating Income Reconciliation
GAAP Operating Income
$
167,548
$
105,749
$
141,380
$
291,090
$
311,873
GAAP Operating Profit
27.1
%
22.0
%
23.9
%
20.5
%
20.5
%
Amortization of acquisition intangibles
1,972
2,170
8,807
6,312
24,429
Stock-based compensation expense - COGS
395
361
309
1,041
898
Stock-based compensation expense - R
16,771
15,472
14,710
48,195
41,530
Stock-based compensation expense - SG
5,901
5,498
5,468
17,877
16,680
Restructuring costs
(360
)
2,319
—
1,959
—
Acquisition-related costs
—
939
3,176
4,105
9,504
Non-GAAP Operating Income
$
192,227
$
132,508
$
173,850
$
370,579
$
404,914
Non-GAAP Operating Profit
31.1
%
27.5
%
29.4
%
26.2
%
26.6
%
Operating Expense Reconciliation
GAAP Operating Expenses
$
149,916
$
140,847
$
155,325
$
432,357
$
458,752
Amortization of acquisition intangibles
(1,972
)
(2,170
)
(8,807
)
(6,312
)
(24,429
)
Stock-based compensation expense - R
(16,771
)
(15,472
)
(14,710
)
(48,195
)
(41,530
)
Stock-based compensation expense - SG
(5,901
)
(5,498
)
(5,468
)
(17,877
)
(16,680
)
Restructuring costs
360
(2,319
)
—
(1,959
)
—
Acquisition-related costs
—
(939
)
(3,176
)
(4,105
)
(9,504
)
Non-GAAP Operating Expenses
$
125,632
$
114,449
$
123,164
$
353,909
$
366,609
Gross Margin/Profit Reconciliation
GAAP Gross Profit
$
317,464
$
246,596
$
296,705
$
723,447
$
770,625
GAAP Gross Margin
51.3
%
51.3
%
50.2
%
51.1
%
50.5
%
Stock-based compensation expense - COGS
395
361
309
1,041
898
Non-GAAP Gross Profit
$
317,859
$
246,957
$
297,014
$
724,488
$
771,523
Non-GAAP Gross Margin
51.4
%
51.3
%
50.3
%
51.1
%
50.6
%
Three Months Ended
Nine Months Ended
Dec. 30,
Sep. 23,
Dec. 24,
Dec. 30,
Dec. 24,
2023
2023
2022
2023
2022
Effective Tax Rate Reconciliation
Q3'24
Q2'24
Q3'23
Q3'24
Q3'23
GAAP Tax Expense
$
33,377
$
34,001
$
36,964
$
74,548
$
82,953
GAAP Effective Tax Rate
19.4
%
31.1
%
26.3
%
24.5
%
26.5
%
Adjustments to income taxes
2,769
604
2,936
9,001
11,371
Non-GAAP Tax Expense
$
36,146
$
34,605
$
39,900
$
83,549
$
94,324
Non-GAAP Effective Tax Rate
18.4
%
25.4
%
22.7
%
21.8
%
23.1
%
Tax Impact to EPS Reconciliation
GAAP Tax Expense
$
0.60
$
0.60
$
0.65
$
1.33
$
1.45
Adjustments to income taxes
0.05
0.01
0.05
0.16
0.20
Non-GAAP Tax Expense
$
0.65
$
0.61
$
0.70
$
1.49
$
1.65
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)
Dec. 30,
Mar. 25,
Dec. 24,
2023
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
483,931
$
445,784
$
434,544
Marketable securities
32,842
34,978
28,373
Accounts receivable, net
217,269
150,473
270,493
Inventories
256,675
233,450
152,426
Prepaid wafers
84,854
60,638
—
Other current assets
109,814
92,533
127,649
Total current Assets
1,185,385
1,017,856
1,013,485
Long-term marketable securities
70,260
36,509
44,784
Right-of-use lease assets
140,993
128,145
150,938
Property and equipment, net
167,579
162,972
156,602
Intangibles, net
31,677
38,876
133,032
435,936
435,936
435,936
Deferred tax asset
34,116
35,580
8,630
Long-term prepaid wafers
73,492
134,363
154,575
Other assets
77,675
73,729
67,907
Total assets
$
2,217,113
$
2,063,966
$
2,165,889
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
56,231
$
81,462
$
117,406
Accrued salaries and benefits
44,352
50,606
42,187
Lease liability
19,906
18,442
14,024
Acquisition-related liabilities
—
21,361
18,195
Other accrued liabilities
58,105
44,469
36,737
Total current liabilities
178,594
216,340
228,549
Non-current lease liability
138,415
122,631
143,252
Non-current income taxes
52,247
59,013
72,267
Other long-term liabilities
47,097
7,700
5,501
Total long-term liabilities
237,759
189,344
221,020
Stockholders' equity:
1,735,824
1,670,141
1,639,056
Accumulated earnings (deficit)
66,633
(9,320
)
80,865
Accumulated other comprehensive loss
(1,697
)
(2,539
)
(3,601
)
Total stockholders' equity
1,800,760
1,658,282
1,716,320
Total liabilities and stockholders' equity
$
2,217,113
$
2,063,966
$
2,165,889
Prepared in accordance with Generally Accepted Accounting Principles
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)
Three Months Ended
Dec. 30,
Dec. 24,
2023
2022
Q3'24
Q3'23
Cash flows from operating activities:
Net income
$
138,723
$
103,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
12,732
18,624
Stock-based compensation expense
23,067
20,487
Deferred income taxes
9,723
10,886
Loss on retirement or write-off of long-lived assets
10
3
Other non-cash charges
668
2,832
Restructuring costs
(360
)
—
Net change in operating assets and liabilities:
Accounts receivable, net
54,048
34,053
Inventories
72,257
12,145
Prepaid wafers
15,596
—
Other assets
17,973
6,458
Accounts payable and other accrued liabilities
(32,123
)
(20,521
)
Income taxes payable
1,378
(10,656
)
Acquisition-related liabilities
—
3,160
Net cash provided by operating activities
313,692
180,948
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities
5,176
3,691
Purchases of available-for-sale marketable securities
(32,334
)
(3,433
)
Purchases of property, equipment and software
(9,813
)
(6,777
)
Investments in technology
—
(831
)
Net cash used in investing activities
(36,971
)
(7,350
)
Cash flows from financing activities:
Payment of acquisition-related holdback
—
(30,949
)
Issuance of common stock, net of shares withheld for taxes
50
393
Repurchase of stock to satisfy employee tax withholding obligations
(13,722
)
(13,541
)
Repurchase and retirement of common stock
(56,923
)
(50,000
)
Net cash used in financing activities
(70,595
)
(94,097
)
Net increase in cash and cash equivalents
206,126
79,501
Cash and cash equivalents at beginning of period
277,805
355,043
Cash and cash equivalents at end of period
$
483,931
$
434,544
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 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
Dec. 30,
Dec. 30,
Sep. 23,
Jun. 24,
Mar. 25,
2023
2023
2023
2023
2023
Q3'24
Q3'24
Q2'24
Q1'24
Q4'23
Net cash provided by (used in) operating activities (GAAP)
$
299,414
$
313,692
$
(22,731
)
$
(39,813
)
$
48,266
Capital expenditures
(42,285
)
(9,813
)
(8,527
)
(12,310
)
(11,635
)
Free Cash Flow (Non-GAAP)
$
257,129
$
303,879
$
(31,258
)
$
(52,123
)
$
36,631
Cash Flow from Operations as a Percentage of Revenue (GAAP)
17
%
51
%
(5
)%
(13
)%
13
%
Capital Expenditures as a Percentage of Revenue (GAAP)
2
%
2
%
2
%
4
%
3
%
Free Cash Flow Margin (Non-GAAP)
14
%
49
%
(6
)%
(16
)%
10
%
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in millions; unaudited)
(not prepared in accordance with GAAP)
Q4 FY24
Guidance
Operating Expense Reconciliation
GAAP Operating Expenses
$138 - 144
Stock-based compensation expense
(22)
Amortization of acquisition intangibles
(2)
Non-GAAP Operating Expenses
$114 - 120
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