Cirrus Logic Q3 2025 Earnings Call Transcript

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Provided by Quartr
February 4, 2025
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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year twenty twenty five Financial Results Q and A session. At this time, all participants are in a listen only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time.

Operator

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. Ms. Heffernan, you may begin.

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

Thank you and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic's Chief Executive Officer and Ulf Haberman, our Interim Chief Financial Officer. Today, at approximately 4PM Eastern Time, we announced our financial results for the third quarter fiscal year twenty twenty five. The shareholder letter discussing our financial results, the earnings press release and the webcast of this Q and A session are all available at the company's Investor Relations website. This call will feature questions from the analysts covering our company.

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

Additionally, the results and guidance we will discuss on this call will include non GAAP financial measures that exclude certain items. Reconciliations of these non GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's investor relations website. Please note that during this session, we may make projections and other forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward looking statements, whether as a result of new developments or otherwise. Please refer to the press release and the shareholder letter issued today, which are on the Xeris Logic website and the latest Form 10 ks, as well as other corporate filings registered with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from current expectations.

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

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

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Thank you, Jassy, and welcome to everyone joining today's call. As you've seen in the press release, in the December, Cirrus Logic delivered revenue of $555,700,000 above the top end of our guidance range. In a moment, I'm going to hand the call over to Ulf to discuss the financial results for the quarter in detail as well as our outlook for the March. But before we move on to that, I'd like to make a few comments about the recent progress we've made on our company strategy. As many of you are aware, our long term strategy for growth at Sirius is based around three principles.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

First, maintaining leadership in our core flagship smartphone audio business second, expanding the value and range of high performance mixed signal functionality in which we serve our customers in smartphones and similar products and third, leveraging that world class expertise in IP in both audio and high performance mixed signal areas to grow and broaden our business in new markets. I want to now speak to our recent progress in each of those areas. In our flagship smartphone audio business, during the quarter, we were delighted with the success of our latest generation custom boosted amplifier and our first twenty two nanometer smart codec, both of which began shipping in recent smartphones. These products represent years of engineering effort and a deep and collaborative relationship with our customer. We are proud of the crucial role they play in enhancing the power efficiency and exceptional audio quality of our customers' latest products.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

We also anticipate that these components will be used in multiple generations of smartphones over a number of years, giving us excellent longer term visibility and an opportunity for sustained revenue contribution. Outside of our custom audio solutions, we also continue to engage with customers with our general market products on next generation flagship smartphones. And during the December, a leading Android OEM introduced their latest flagship smartphone featuring three Cirrus Logic components, including two boosted amplifiers and a haptic driver. Beyond audio, our goal is to continue to broaden our high performance mixed signal content in smartphones, where we see a meaningful opportunity to not only expand our addressable market, but also to grow and diversify our revenue. Our progress in this area has been demonstrated through the continued success of our camera controller product line, as the total value of our camera content has increased over the last few years.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

With the latest generation of devices, we are benefiting from a more favorable overall mix of smartphones on the market that include these camera controllers. And this more favorable mix contributed to today's robust results. We also believe there is significant potential to continue to grow value in this area in the future, and we are today investing in a roadmap of further products and features in pursuit of that goal. Beyond camera controllers, we've also seen strong interest in our capabilities around battery and power. Currently, we have a number of R and D programs underway related to these areas, and we continue to be excited about the long term opportunities these areas represent for further growth and diversification of our revenue.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

The third principle of our strategic plan is to leverage our audio and high performance mixed signal expertise into new applications and markets outside of smartphones, such as laptops. Although we are still in the early stages of revenue contribution from our laptop components, we were pleased with the milestones we achieved during the past few months. First, our audio solutions were featured as part of the Intel Aero Lake reference design. Second, I made a significant number of laptop announcements at CES twenty twenty five. A leading laptop OEM introduced a high volume commercial mainstream laptop that utilizes the sound wire interface and features our latest PC codec and power conversion IC.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Lastly, we're excited to have started sampling our next generation PC amplifier and codec, which we anticipate will broaden our portfolio further and address a wider range of the laptop market as customers seek to deliver improved performance across tiers and retail price points. While we are very excited about our potential for growth in the PC market, we also see opportunities to expand our business in other new markets. As part of this effort, during the quarter, we began sampling a series of timing products designed to enable superior audio experiences in automotive and professional audio applications. We're encouraged by the early customer interest and the strategic opportunities ahead of us in these markets. Finally, before we get into the deep dive on our results, I'd like to take a moment to highlight the leadership announcement we made earlier today.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

We're delighted that Jeff Willard will be joining Cirrus Logic as Chief Financial Officer later this month. Jeff brings considerable experience in the semiconductor industry as well as a proven track record in finance, strategy and M and A. I believe his deep industry knowledge and financial expertise will be a considerable asset as we continue to execute on our strategy to drive growth in our existing business while expanding into new markets. All of us at Cirrus are excited to have Jeff join the team. I would also like to take this opportunity to thank Ulf Haberman for his leadership as Interim Chief Financial Officer while we conducted this search.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Ulf is an outstanding member of the Cirrus Logic organization and I look forward to continuing to work with him in his role as Principal Accounting Officer, Treasurer and Senior Vice President of Finance. And with that, let me now turn the call over to Ulf to provide an overview of our financial results as well as the outlook.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Thank you, John, and good afternoon, everyone. I will start with a summary of our financial results for our third quarter fiscal twenty twenty five and then provide guidance for Q4 FY twenty twenty five. In Q3 FY twenty twenty five, we delivered revenue of $555,700,000 significantly above the top end of our guidance range due to stronger than expected demand for product shipping into smartphones. On a sequential basis, revenue was up three percent primarily due to higher smartphone unit volumes. On a year over year basis, sales were down 10% primarily driven by lower smartphone unit volumes in part due to the timing of our fiscal quarters.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

This was partially offset by increased revenue associated with our latest generation products. Also, as we indicated in our Q2 FY twenty twenty five shareholder letter, when comparing our December to the equivalent quarter last year, we would note that in FY twenty twenty five, our December began one week later. Thus, it encompassed one week less of the higher volume production associated with typical seasonal product ramps. Additionally, in FY twenty twenty five our December quarter included one less week of revenue when compared to the equivalent quarter the prior year as FY '20 '20 '4 was a fifty three week fiscal year. Turning to gross profit and gross margin.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Non GAAP gross profit in the quarter was $298,100,000 and non GAAP gross margin was 53.6%. On a sequential basis, the gross margin increase of 140 basis points was mostly driven by a shift in mix towards higher margin products and to a lesser extent lower supply chain costs. The two thirty basis point increase year over year was largely due to a shift in mix with higher margin products. This was partially offset by higher inventory reserves and supply chain costs. Now I'll turn to operating expenses.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Non GAAP operating expense for the third quarter was $129,200,000 On a sequential basis, OpEx was up $2,500,000 primarily due to higher employee related expenses. This was offset by a reduction in product development costs. On a year over year basis, operating expense was up $3,600,000 largely due to higher employee related expenses. This was partially offset by an increase in R and D incentives. Non GAAP operating income for the quarter was $168,900,000 or 30.4% of revenue.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Turning now to taxes. For the December, our non GAAP tax rate was 21.8% in line with our previous guidance. And lastly on the P and L, non GAAP net income was $138,300,000 resulting in earnings per share for the December of $2.51 Let me now turn to the balance sheet. Our balance sheet continues to be strong and we ended the December with $816,600,000 in cash and investments. Our ending cash and investments balance was up $110,000,000 from the prior quarter as cash generated from operations was partially offset by share repurchases.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

We continue to have no debt outstanding and have $300,000,000 undrawn on our revolver. Inventory at the end of the third quarter was $275,600,000 up from $271,800,000 in Q2 FY twenty twenty five. Days of inventory were up slightly sequentially and we ended the quarter with approximately ninety eight days of inventory. Looking ahead in Q4 FY twenty twenty five, we expect an increase in inventory dollars from the prior quarter. We anticipate inventory will continue to increase and peak in the first half of FY twenty twenty six as we continue to fulfill demand and manage our wafer purchase commitments per our long term capacity agreement with GlobalFoundries.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Turning to cash flow. Cash flow from operations was $218,600,000 in the December and CapEx was roughly $6,700,000 resulting in non GAAP free cash flow margin of roughly 38. For the trailing twelve month period, cash flow from operations was $484,500,000 and CapEx was roughly $27,300,000 This resulted in non GAAP free cash flow margin of roughly 25%. On the share buyback front, in Q3, we utilized $70,000,000 to repurchase approximately 679,000 shares of our common stock at an average price of approximately $103 At the end of Q3 FY 'twenty five, the company had 154,100,000 remaining in its share repurchase authorization. We expect to continue to return capital in form of stock repurchases, which we believe will provide a long term benefit to shareholders going forward.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

Now on to the guidance. For Q4 of FY twenty twenty five, we expect revenue in the range of $350,000,000 to $410,000,000 GAAP gross margin is expected to range from 51% to 53% non GAAP operating expense is expected to range from $119,000,000 to $125,000,000 We expect our FY twenty twenty five non GAAP tax rate to be approximately 22% to 24% unchanged from our previous guidance. This range is slightly higher than our FY twenty twenty four tax rate, which was impacted by a favorable catch up benefit related to updated IRS guidance on the R and D capitalization rules. In closing, we delivered strong results for the December as we continue to execute on our strategy to grow our business and drive long term shareholder value. Before we get into Q and A, I would like to note that while we understand there's intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship.

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

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

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

Thanks, Zolf. We will now start the Q and A portion of the earnings call. Please limit yourself to a single question and one follow-up. Operator, we are now ready to take questions.

Operator

We'll take our first question from the line of Tore Sandberg with Stifel. Please go ahead.

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Yes. Thank you and congratulations on the results, especially the cash flows. I had a question on your timing business, John. This is obviously new. And I was just wondering, are you leveraging sort of the old MEMS IP you have here?

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Or should I think about the technology here as being something that you have more recently developed?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Thank you, Tore. Yes, this is not leveraging MEMS IP. When we got out of MEMS, we really did get out of MEMS. This is new IP we've developed with a few opportunities in mind that we see for this technology. One of those we mentioned in a series of announcements last year around the pro audio market and then one of the other key target markets for that is the automotive market.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So that's very much a long term project for us, just given the lead time and the lag in the auto industry. So we don't expect anything material around that for several years. But we have over the past year seen really great interest from customers in audio parts for automotive, haptic parts for automotive and timing products for automotive. And as in car networks become more prevalent and there are more audio zones and more speakers and more channels and so on, the need for low jitter clocks and great timing products increases and that's what we're serving there. So as I say, it's very much a long term project, although that particular product or some of those products have been already specified as part of a future platform by at least one Tier one OEM.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So we're very optimistic about it long term, but it will be some time before it moves the needle.

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Very good. And as my follow-up, so I do know you're on a fiscal year, but this is the beginning of a new calendar year. Obviously, you have content growth sort of happening pretty consistently every year because of the casketing effects and so on and so forth. But as we think specifically about calendar 2026, is this going to be more sort of a unit growth year or is there some more material content growth that you could potentially speak to?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Yes. I think we always stop shy of talking about unannounced customer products obviously, but I have previously said this isn't a major content year for us on the smartphone side. That said, we always aim to be in a position to grow in a flat units environment. We don't want to be depending on units tailwinds. We can do better than that.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So we do still see some favorable tailwinds over the next year. One of those in the smartphone space, of course, is that cascading effect. In particular, we see that kind of continued year on year accretion of the value of our camera content. That gives us a favorable tailwind as we go into the next cycle. And then of course, we're anticipating growing momentum in the laptop space this year as well.

Operator

Our next question comes from the line of Thomas O'Malley with Barclays. Please go ahead.

Tom O'Malley
Tom O'Malley
Analyst at Barclays Capital

Hey, John and team. Thanks for taking the question. Appreciate it. My question was about the linearity of the quarter. So you guys did a really good job last time around kind of talking about the differences between this December and December of twenty twenty three.

Tom O'Malley
Tom O'Malley
Analyst at Barclays Capital

And if I look at the difference between what would have been another week in sales, it looks like you guys actually did even a bit better than that in terms of where you had originally set up guidance. So can you talk about what happened? You called out units specifically in the shareholder letter. Was that something that you saw kind of consistently as the quarter went along? Or did something change at some point in the quarter that got you to the better results here from a unit perspective?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Yes, Tom, thank you. That's a great question. Actually, one of the things that we saw during the December was more sustained demand than would be typical for December patent. So I've said elsewhere that it's not unusual. In fact, in the majority of years, we'd see some kind of demand modulation during the December just as the channel gets stopped and there's a read on the demand at the end user level for the devices.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Actually what we saw in this quarter was really that the demand that we saw from our customer was very steady, in fact increased slightly relative to when we guided. And then of course that was one of the factors along with new content from us there that drove the strong results.

Tom O'Malley
Tom O'Malley
Analyst at Barclays Capital

And then if I look at your June, as well as some of the March, I know that you guys can't tell what devices are being shipped into, but you can see mix particularly given that you've updated the codec in this last generation. So has there been any mix shift to any more of the legacy product that you're shipping, at the end of the December or into the March to this point? Just want to understand if there's any mix dynamic that's changing here into the March at all? Thank you.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

I don't think we've seen anything pronounced from a mix shift perspective. Obviously, we can quite clearly identify what's shipping into new devices, but when it comes to older generation devices or any products which are using devices that we're shipping that have been in the market for some time, we have a relatively low resolution view of that. We don't know exactly what the how that breaks down. But I think if you look so far as I'm aware, if you look from the December through to now, we didn't see anything significant change from a mix shift perspective.

Operator

Our next question comes from the line of David Williams with The Benchmark Company.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Hey, good afternoon. Thanks for taking my questions and congrats on a really solid quarter. I guess, maybe my first question is just on the gross margin side. Clearly, a few different drivers there and you pointed to some of those in the script. But if I'm not mistaken, this looks like a record high, at least as far as my model goes back.

David Williams
Equity Research Analyst at The Benchmark Company LLC

So just kind of curious what the drivers are there and how much of that is really driven by the new products maybe into your largest customer versus some of the products that are going in some of the other markets we've had success in or with?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Yes, of course. So we don't break out in detail all the moving pieces associated with gross margin. It's obviously though a function in large part of our supply chain costs and overall product mix. And it can move around a lot, in particular, in periods of introduction of new products. If you look back over the whole fiscal year or over the past few quarters, in fact, in a relatively short span of time, we've gone from guiding gross margin below our long run average to, in this case, reporting gross margin above our long run average.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

And when we were guiding below our long run average that was at the beginning of the ramp of new products. And you typically do see headwinds on supply chain costs at that time. And there's a huge amount of work to kind of get that yield curve progress along the yield curve, improve test times and so on. And that's a big part of what the team has focused on over the past few months since we started ramping these products to do the best job we can on efficiency and driving down supply chain costs. So that obviously plays a big part along with overall product mix in driving the results that we reported.

David Williams
Equity Research Analyst at The Benchmark Company LLC

Thanks. And I appreciate the color there. And as a follow-up, just kind of curious if you could size the market for the laptop side. Sounds like you've got some new products kind of moving down the tiers more maybe for the broader market. Can you talk maybe about that your expectations there?

David Williams
Equity Research Analyst at The Benchmark Company LLC

And maybe what the laptop market could potentially be if we look out a couple of years in terms of revenue? Thank you.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Yes, absolutely. So from a units perspective, if you take the overall laptop market and say, call it between two hundred million and two twenty million units depending on your research source, We think we should be able to address somewhere approaching half of that. And the products, the new products that we referenced in the shareholder letter are an important part of that strategy in supporting a wider range of price tiers and a wider range of configurations of content, different audio architectures and so on. So we think the way we categorize the tiers is that in really anything above the kind of $800 price point is highly relevant to us. And of course, there'll be cases where we're aiming at products below that.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

But that really does put you firmly in the kind of mainstream bracket and gives you roughly half the market to shoot for. Within that range of units, there'll be a fairly broad spectrum of different content configurations. It could be anything from a single piece of content, maybe rounding to a dollar up to high single digits where we have a mixture of amplifiers, haptics, power converters and a codec. So when we think further out about the size of the market, I'm not going to put a revenue number a couple of years out, but we do see a kind of continued solid growth opportunity for us here. I said the previous color I've given on our kind of revenue ramp in the PC space has been that it was kind of de minimis in fiscal twenty twenty four and then we were targeting low tens of millions in fiscal twenty twenty five.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So as I mentioned in the letter, we're tracking in line to that as we approach the kind of home straight of fiscal twenty twenty five. And then we expect that to depending on the overall demand picture based on the designs that we have secured to date, we would expect that to roughly double during fiscal twenty twenty six. And then beyond that, we see good opportunity for meaningful step ups in revenue from there in subsequent years.

Operator

Our next question comes from the line of Christopher Rolland with Susquehanna. Please go ahead. Christopher, your line might be on mute.

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at SIG Group

Thank you. Thank you, operator. So you guys used to talk about HPMS being potentially a parity with audio as a percentage of revenue at some point in the future. And then obviously, this is a strong cycle for audio for you guys. I think audio is 62% of total.

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at SIG Group

So I guess my question is, do you still expect HPMS to match audio at some point in the future? And what might be a rough timeframe for this? Is it a year or two years or much more than that? And what has to happen for parity there between those segments? Thanks.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Yes. Thanks, Chris. I do think so, yes. It's not in a year, I don't think. But as we look a bit further out within our planning horizon, it is certainly something that we think is a very real opportunity.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So, yes, we are in a period where actually our audio content accelerated a bit in this fiscal year. Yes, we're obviously very happy about that. So the kind of parity point was really to convey how large of an opportunity we see with HPMS. It's not that we don't want to grow audio as well obviously. But when we look further out, really HPMS actually represents the larger part of the SAM that we see ahead of us.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

So in our investor presentation, you'll see we talk about roughly $9,000,000,000 SAM in 2028 that we think is in front of us and audio comes in at just a little over a third of that. So we see significant opportunity to expand in HPMS and that is kind of disproportionately large relative to audio. And as I've said previously, that will be a mixture of components whether that's camera or haptics or power related. We have a number of irons in the fire on the HPMS front and believe that they all represent a good opportunity to drive growth.

Christopher Rolland
Christopher Rolland
Senior Equity Analyst at SIG Group

Thank you, John. And also in the letter, it's a good segue into Power. So you spoke about a number of R and D programs for Battery and Power Management. I guess, first of all, I was wondering if you could talk about the investment, when you think that investment in R and D might peak? And then are these products ready for revenue today or when might we see these products ramping for revenue?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Thank you, Chris. We are shipping a range of power related products for revenue today, both in our custom silicon business and in the general market. So power is something that we ship into both Android devices and laptops, for example. But when we talk about the investments that we're making kind of below the waterline that you're not that are invisible to outsiders as yet, we do think there are a number of other power areas where there is opportunity to grow. And typically I'll call this out since you mentioned power management.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Typically we think less of conventional power management and more around power control conversion and sensing with particular focus on stuff around the battery. So either side of the battery, but really leveraging our extremely high precision sensing capability and our ability to kind of package that with a lot of digital enabling fine grain control and signal processing alongside the analog. So where we're at today in relation to those is we have some great IP in silicon. Some of that has been shown to customers. Some of it will be shown to customers before too long.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

And we're kind of working the playbook which is very familiar to us to take those innovations forward to sockets. So we're still some way off that and we'll obviously kind of give more color as things progress. But we're very familiar with the process around securing high value sockets in the HPMS domain. You're not going to win one without showing very, very innovative IP in silicon. And so at this point, we feel in a good spot with IP that we've got in test silicon and we're looking forward to taking it forward from here.

Operator

Our next question comes from the line of Gary Mobley with Loop Capital. Please go ahead.

Gary Mobley
Managing Director & Senior Equity Analyst at Loop Capital

Hi, everybody. Thanks for taking my question. I know you're not going to give too many details or any with respect to your largest customer, but clearly there's a lot of early speculation that maybe that largest customer might move to a multi lens horizontal configuration for a camera, especially at the premium tier, maybe some thinner designs in the lower tier and maybe even some foldable designs. And without, you know, maybe talking about, your customers specifically there, maybe if you can just talk in general about how those types of configurations and designs might affect your content in camera haptics, PAR related content and whatnot?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Well, we're certainly very proud of what we've done over the past few years in helping to enable innovation in cameras. The launch last fall was our fifth successive generation of camera controller of customer product shipping with our camera controllers in there and there have been some really, really meaningful innovations in that time. I would say that's one of the areas when I look across all our engineering, that's one of the areas where we work most tightly with our customer teams on future roadmap technologies. So you can be sure that we have a substantial amount of investment going into enabling more features and more functionality for the future. But it's clearly something that would be extremely discrete about it about what's involved in that.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

When we think about different form factors, form factor devices, devices with hinges and so on because we've been shipping in folding devices for several years now, for example. And what we see is that represents great opportunities for us in certainly in audio and potentially haptic space because typically, well, for a variety of reasons, one would be that you don't necessarily want too much stuff going across the hinge if you can avoid it. Another would another reason why it creates opportunity is that often the devices have multiple modes of use when they're folded and when they're unfolded. That leads to quite often in the case of audio functionality that leads to more microphones, different configurations of microphones and requirements for processing in different device orientations and so on. And all of that kind of drives new features and new requirements for us.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

That's what we've seen in kind of novel form factor devices that we've been shipping in for a few years.

Gary Mobley
Managing Director & Senior Equity Analyst at Loop Capital

Okay. Appreciate that. As my follow-up, I wanted to ask about the Android win that you highlighted in your prepared remarks. I think you mentioned three audio products in use there. And I presume this is for some of your general purpose products because I don't think you really go into the Android market with application specific products or custom products.

Gary Mobley
Managing Director & Senior Equity Analyst at Loop Capital

So my question is with this general purpose approach into the Android market, are there ample opportunities and could it ever be a sizable portion of revenue for you?

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

When we think about Android, I've been pretty clear over the past couple of years that we treat that largely on an opportunistic basis. And the reason for that is that we anticipated headwinds in China largely due to geopolitical reasons and because we feel there are larger opportunities for us elsewhere, so for example in the laptop space. So as of right now, we don't make a lot of R and D investment in the Android space, but we continue to win flagship sockets in both audio and haptics with multiple Android OEMs based on products that we have today. And those are leveraging IP that we've developed over the years and have shipped into many, many Android phones. So we continue to serve our customers there and grow revenue where we can and win sockets where we can and where that's kind of economically attractive to us.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

But the focus for our R and D investment is on growing in other markets.

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

And we have time for one more question.

Operator

Our final question comes from the line of Tore Svanberg with Stifel. Please go ahead.

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Yes. Thanks Chelsea. Just one follow-up. Your SG and A has been consistent around 6% of revenue 6% to 7% of revenue here for many, many years. I'm just wondering as you continue to venture into new markets, do you have to invest in sort of a new sales organization?

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Or should we think of your entrance into the automotive market, for instance, kind of more similar to laptop where it's more based on a reference design where you don't need that big of a sales force?

Ulf Habermann
Ulf Habermann
Controller, Treasurer, Principal Accounting Officer & Interim CFO at Cirrus Logic

I would say, Tory, if you think about it, the SG and A level that we're at, we're pretty comfortable with. I don't see that significantly changing into the future even if we tackle new markets. We do have opportunities to also look at where our existing investments are, reallocate that a bit and I don't see us growing that to support those markets.

Tore Svanberg
Tore Svanberg
Analyst at Stifel Financial

Great. Thank you.

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

And with that, we will end the Q and A session. And I will now turn the

Chelsea Heffernan
Chelsea Heffernan
Director of Investor Relations at Cirrus Logic

call back over to John.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Thank you, Chelsea. In summary, in Q3 fiscal year twenty twenty five, Cirrus Logic delivered outstanding results for the December as we experienced strong demand for components shipping into smartphones. We continue to make solid progress in each of the three key areas of our long term strategy and remain very excited about the opportunities in front of us. I'd like to thank you for your continued interest in our progress and to thank our employees for their incredible dedication and commitment. Thank you for participating today.

John Forsyth
John Forsyth
President & CEO at Cirrus Logic

Goodbye.

Operator

That will conclude today's call. Thank you all for joining. You may now disconnect.

Executives
    • Chelsea Heffernan
      Chelsea Heffernan
      Director of Investor Relations
    • John Forsyth
      John Forsyth
      President & CEO
    • Ulf Habermann
      Ulf Habermann
      Controller, Treasurer, Principal Accounting Officer & Interim CFO
Analysts
    • Tore Svanberg
      Analyst at Stifel Financial
    • Tom O'Malley
      Analyst at Barclays Capital
    • David Williams
      Equity Research Analyst at The Benchmark Company LLC
    • Christopher Rolland
      Senior Equity Analyst at SIG Group
    • Gary Mobley
      Managing Director & Senior Equity Analyst at Loop Capital
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Earnings Conference Call
Cirrus Logic Q3 2025
00:00 / 00:00

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