Cirrus Logic, Inc. (CRUS) Earnings & Analysis

Latest quarter

Cirrus Logic reported Q1 FY2027 revenue of $459.7 million, below the $459.9 million consensus. Adjusted earnings per share of $1.84 exceeded the $1.80 consensus.

Revenue rose 12.9% from $407.3 million a year earlier. The company’s filing attributed growth in both audio and high-performance mixed-signal products primarily to higher sales of components used in smartphones, partly offset by previously anticipated pricing reductions. Audio sales increased $9.0 million, while high-performance mixed-signal sales rose $43.5 million.

Diluted earnings per share increased to $1.47 from $1.14. Gross margin was 52.6% in both periods; the filing said a favorable product mix was partly offset by higher freight and supply-chain costs. Operating margin rose to 18.4% from 17.8%.

Free cash flow fell to $48.6 million from $113.4 million. The filing said operating cash flow was affected by an unfavorable change in working capital, primarily from increases in receivables and inventory and decreases in payables and other accrued liabilities.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO John Forsyth said demand continued for Cirrus Logic’s custom-boosted amplifiers and smart codecs, helped by a product cycle at its customer. He expects those components to ship in multiple future generations of customer products. Forsyth also said development of a smart power IC for 3D sensing remained on schedule, and the company was collaborating with its customer on other power and battery products.

Forsyth reduced his fiscal-year expectations for the PC business, citing constrained supply of a platform containing Cirrus components, memory and component shortages, and PC makers’ decisions to delay models and extend existing platforms. He said the delayed models generally have more Cirrus content per system and, in many cases, higher volumes. He characterized the issues as “timing rather than anything fundamental.”

On gross margin, CFO Jeff Woolard said wafers bought under prior agreements should provide a temporary benefit in Q2 before that supply largely sells through. Asked about input costs, Woolard said the company would monitor them, work on cost reductions and “look at targeted price increases as warranted.” He maintained the company’s long-term gross-margin outlook.

Forsyth said Cirrus was developing a new family of analog front-end components for smart meters. Asked about the opportunity, he said the company expected to sample the products widely in the third and fourth quarters and was targeting a calendar 2028 market launch; he considered it premature to quantify the addressable market.

On investment, Woolard said Cirrus was buying testers for outsourced assembly and test providers to increase supply-chain flexibility and improve financial returns. Forsyth said the company was placing less emphasis on Android, citing opportunities elsewhere and competitive conditions in that market.

Guidance

Forsyth said Cirrus Logic’s expectations for its PC business this fiscal year had fallen since May. He attributed the change to platform supply constraints, memory and component shortages, and delayed PC model introductions. He characterized those factors as timing issues rather than a fundamental change.