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CIRRUS LOGIC, INC.

(CRUS)
  Report
Delayed Nasdaq  -  04:00 2022-10-06 pm EDT
71.69 USD   -1.89%
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Cirrus Logic : Shareholder Letter Q1FY2023 (PDF)

08/02/2022 | 04:16pm EDT

Q1 FY23

Letter to Shareholders

August 2, 2022

August 2, 2022

Dear Shareholders,

In Q1 FY23 Cirrus Logic delivered record first quarter revenue of $393.6 million and GAAP and non- GAAP earnings per share were $0.69 and $1.12, respectively. Revenue for the quarter was above the high end of guidance as component shipments into smartphones exceeded expectations, and we continued to benefit from strong demand for flagship devices. Operating expense for the quarter was slightly below the midpoint of guidance despite higher revenue. During the quarter, we started development of a next-generation22-nanometer smart codec for smartphones and began initial production ramps ahead of new smartphone introductions later this year. Furthermore, we expanded our footprint in the laptop market while also continuing to invest in longer-term opportunities that we believe will enable us to capitalize on the secular trends driving increased content opportunities in these devices. The company remains focused on delivering long- term growth through investment in new technologies and high-performancemixed-signal (HPMS) products where we can leverage our expertise in low-power,low-latency signal processing. With a compelling pipeline of audio and HPMS custom and general market components coming to market over the next few years, we believe Cirrus Logic is well-positioned for future success.

We would like to recognize John Melanson, a senior technical fellow who has been at Cirrus Logic for nearly 30 years. John was recently granted his 500th U.S. patent, an achievement that places him 94th on the list of the 100 most prolific inventors. His innovations have been the catalyst for many products that led to rapid advancements in personal computing, semiconductors, and networking.

Figure A: Cirrus Logic Q1 FY23 Results

GAAP

Adj.

Non-GAAP*

Revenue

$393.6

$393.6

Gross Profit

$202.6

$0.3

$202.9

Gross Margin

51.5%

51.5%

Operating Expense

$148.4

($28.9)

$119.5

Operating Income

$54.3

$29.1

$83.4

Operating Profit

13.8%

21.2%

Interest Expense

$0.3

$0.3

Other Expense

$0.5

$0.5

Income Tax Expense

$15.4

$4.3

$19.7

Net Income

$39.7

$24.8

$64.5

Diluted EPS

$0.69

$0.43

$1.12

*Complete GAAP to Non-GAAP reconciliations available on page 13

Numbers may not sum due to rounding

$ millions, except EPS

Q1 FY23 Letter to Shareholders

2

Revenue and Gross Margin

Cirrus Logic reported revenue for the June quarter of $393.6 million, down 20 percent sequentially but up 42 percent year over year. The decline in revenue on a sequential basis reflects a reduction in smartphone unit volumes. Growth in year-over-year sales was driven by HPMS content gains and higher ASPs. In the June quarter, revenue derived from our audio and HPMS product lines represented 65 percent and 35 percent of total revenue, respectively. One customer contributed approximately 79 percent of total revenue in Q1 FY23. Our relationship with our largest customer remains outstanding, with continued strong design activity across a wide range of products. While we understand there is intense interest in this customer, in accordance with our policy, we do not discuss specifics about this business.

Figure B: Cirrus Logic Revenue ($M) Q2 FY21 to Q2 FY23

$600

$548

$500

$486

$466

$490

$470*

$400

$394

$347

$300

$294

$277

$200

$100

$0 Q2/FY21 Q3/FY21 Q4/FY21 Q1/FY22 Q2/FY22 Q3/FY22 Q4/FY22 Q1/FY23 Q2/FY23

Audio

High-PerformanceMixed-Signal

*Midpoint of guidance as of August 2, 2022

In the September quarter, we expect revenue to range from $450 million to $490 million, up 19 percent sequentially and one percent year over year at the midpoint. The sequential increase in revenue is expected to be driven primarily by higher unit volumes. The anticipated year-over-year change in sales reflects higher ASPs and, to a lesser extent, increased HPMS content in smartphones.

Q1 FY23 Letter to Shareholders

3

Figure C: High-PerformanceMixed-Signal Revenue Contribution FY19 - FY22

High-performancemixed-signal solutions include camera controllers, haptics and sensing, fast-charging and power conversion, and control ICs

GAAP gross margin in the June quarter was 51.5 percent, compared to 52.8 percent in Q4 FY22 and

50.5 percent in Q1 FY22. Non-GAAP gross margin in the June quarter was above the high-end of guidance at 51.5 percent. This compares to 52.9 percent in Q4 FY22 and 50.6 percent in Q1 FY22. On a sequential basis, gross margin decreased as cost increases that took effect in January were fully reflected in product shipments during the quarter. This was partially offset by a favorable product mix. The year-over-year change in gross margin reflects the favorable impact of higher ASPs on general market products. In the September quarter, we expect gross margin to range from 49 percent to 51 percent.

Operating Profit, EPS, and Cash

Operating profit for Q1 FY23 was approximately 13.8 percent on a GAAP basis and 21.2 percent on a non-GAAP basis. GAAP operating expense was below the midpoint of guidance at $148.4 million, down $2.5 million sequentially and up $27.5 million year over year. The sequential decline was primarily driven by a reduction in variable compensation and employee-related expenses. This was offset by higher product development costs and stock-based compensation. On a year-over-year basis, the increase reflects higher employee-related expenses, including a significant addition to our R&D headcount, amortization of acquired intangibles, variable compensation, acquisition- related costs, stock-based compensation, and product development costs. GAAP operating expense included $17.9 million in stock-based compensation, $7.8 million in amortization of acquisition intangibles, and $3.2 million in acquisition-related costs. Non-GAAP operating expense was $119.5 million, down $3.6 million sequentially and up $16.4 million year over year.

Q1 FY23 Letter to Shareholders

4

GAAP R&D and SG&A expenses for Q2 FY23 are expected to range from $154 million to $160 million, including approximately $20 million in stock-based compensation, $8 million in amortization of acquired intangibles, and $3 million in acquisition-related costs. Looking ahead, we see significant opportunities to continue our technology and product diversification across existing and new markets. We anticipate making ongoing R&D investments to address strategic opportunities, while also monitoring the macro environment and exercising overall operational discipline. The company's total headcount exiting Q1 was 1,604.

Figure D: GAAP R&D and SG&A Expenses ($M)/Headcount Q2 FY21 to Q2 FY23

$160

1,513

1,592

1,587

1591

1604

$150

1,480

1,474

1,481

$140

$130

$120

$110

$100

$90

$80

$70

$60

$50

$40

$30

$20

$10

$0

Q2 FY21

Q3 FY21

Q4 FY21

Q1 FY22

Q2 FY22

Q3 FY22

Q4 FY22

Q1 FY23

Q2 FY23

R&D

SG&A

Expense*

Headcount

*Reflects midpoint of combined R&D and SG&A guidance as of August 2, 2022

GAAP earnings per share for the June quarter was $0.69, compared to $1.64 the prior quarter and $0.29 in Q1 FY22. Non-GAAP earnings per share for the June quarter was $1.12, versus $2.01 in Q4 FY22 and $0.54 in Q1 FY22.

Our ending cash and cash equivalents balance in the June quarter was $453.7 million, up from $444.2 million the prior quarter. In Q1, we utilized $56.4 million to repurchase 724,871 shares at an average price of $77.78. As of June 25, 2022, the company had $136.1 million remaining in its 2021 share repurchase authorization. Furthermore, the Board of Directors recently authorized the company to repurchase up to an additional $500 million of Cirrus Logic common stock. Cash from operations for the quarter was $74.4 million. We expect to continue strong cash flow generation in FY23 and will evaluate potential uses of this cash, including investing in the business to pursue

Q1 FY23 Letter to Shareholders

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Cirrus Logic Inc. published this content on 02 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2022 20:14:03 UTC.


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Sales 2023 1 763 M - -
Net income 2023 208 M - -
Net cash 2023 291 M - -
P/E ratio 2023 19,7x
Yield 2023 -
Capitalization 4 010 M 4 010 M -
EV / Sales 2023 2,11x
EV / Sales 2024 2,00x
Nbr of Employees 1 591
Free-Float 99,7%
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Venkatesh R. Nathamuni Chief Financial Officer
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Allan William Hughes Vice President-Information Technology
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