Cirrus Logic Q3 Earnings Call Highlights

Cirrus Logic (NASDAQ:CRUS) used its fiscal third-quarter 2026 earnings Q&A session to highlight stronger-than-expected December-quarter demand tied to smartphone shipments, while also outlining progress in PCs and other “general market” categories as part of its longer-term diversification strategy.

December-quarter results topped guidance on smartphone demand and mix

Chief Executive Officer John Forsyth said the company delivered “outstanding results” in the December quarter, reporting revenue of $580.6 million, which was above the top end of its guidance range. Forsyth attributed the outperformance to “stronger-than-anticipated demand for components shipping into smartphones and a favorable mix of end devices.” He also said Cirrus Logic delivered record GAAP and non-GAAP earnings per share for the quarter.

Chief Financial Officer Jeff Woolard added that revenue rose 4% sequentially, driven by higher smartphone unit volumes, partially offset by a decline in general market sales. Revenue was also up 4% year over year, primarily from higher smartphone unit volumes, with the increase partially offset by “previously anticipated pricing reductions and lower general market sales,” Woolard said.

Margins, operating expenses, and record non-GAAP EPS

On profitability, Woolard reported non-GAAP gross profit of $308.2 million and non-GAAP gross margin of 53.1%. Gross margin increased 60 basis points sequentially, driven mainly by “a reduction in inventory reserves” and, to a lesser extent, supply-chain efficiencies. Year over year, gross margin declined 50 basis points, which Woolard said was “largely due to the impact of previously anticipated pricing reductions,” mostly offset by cost reductions.

Non-GAAP operating expenses were $133 million, up $5.3 million sequentially due primarily to higher employee-related expenses, partly offset by lower product development costs related to the timing of tapeouts. Non-GAAP operating income was $175.1 million, or 30.2% of revenue.

Woolard said the non-GAAP tax rate was 15.1%, “which incorporates the impact of the One Big Beautiful Bill Act.” Non-GAAP net income was $156.7 million, resulting in record non-GAAP earnings per share of $2.97.

Cash, buybacks, and inventory levels

Cirrus Logic ended the quarter with $1.08 billion in cash and investments and no debt outstanding. Woolard said cash and investments increased $185.9 million sequentially, as cash generated from operations was partially offset by share repurchases.

Inventory finished at $189.5 million, down from $236.4 million in the prior quarter, with approximately 63 days of inventory on hand.

Cash flow from operations was $290.8 million and capital expenditures were $5.2 million, producing a non-GAAP free cash flow margin of 49% for the quarter. Over the trailing 12 months, cash flow from operations was $629.6 million and CapEx was $21.6 million, equating to a non-GAAP free cash flow margin of 31%.

The company repurchased approximately 591,000 shares for $70 million at an average price of $118.33. Cirrus Logic ended the quarter with $344.1 million remaining under its repurchase authorization.

March-quarter outlook and seasonality commentary

For fiscal Q4 2026, management guided for revenue of $410 million to $470 million. GAAP gross margin is expected to range from 51% to 53%, and non-GAAP operating expense is expected to range from $124 million to $130 million. The company’s fiscal 2026 non-GAAP effective tax rate is expected to be 16% to 18%.

Asked about the quarter’s revenue outperformance and the March-quarter outlook, Woolard said the seasonal pattern from Q3 to Q4 still looks consistent with historical transitions, but the company was “further away from the peak than we thought” when it gave guidance the prior quarter. He cited “the peak of units and a favorable mix” as the key drivers.

On supply, management said it does not currently see major constraints, though Woolard noted the industry is “tighter” and the company will continue to manage capacity. He added that long product life cycles can provide flexibility if production needs to be shifted.

When asked about fiscal 2027 seasonality given staggered product launches by its largest customer, management said it is only guiding the next quarter, but based on current long-term forecast signals it does not see anything that “significantly changes” historic seasonality.

Strategy updates: smartphone audio, mixed signal expansion, and new markets

Forsyth reiterated Cirrus Logic’s three strategic pillars: maintaining leadership in flagship smartphone audio, expanding high-performance mixed-signal (HPMS) content in smartphones, and leveraging its audio and mixed-signal expertise in new markets.

• Smartphone audio: Forsyth said demand was very strong for the company’s latest-generation custom-boosted amplifier and 22-nanometer smart codec, which he said use new architectures intended to enable system-level improvements across smartphone generations and extend product life cycles.
• HPMS roadmap: Management said engagement around its camera controller roadmap remained strong and that it continues to invest in IP and capabilities for advanced battery and power applications.
• PC momentum: Forsyth said the company ramped first shipments of its latest-generation amplifier and codec in mainstream PC platforms ahead of customer product launches. He also highlighted sampling a new component intended to enhance voice as an interface for “future AI-enabled PCs,” adding that interest from OEMs and platform vendors has been strong.

Forsyth also pointed to new customer products introduced at CES in January that use Cirrus amplifiers, codecs, and haptic drivers, including what he described as the company’s first win with a new customer in a high-end laptop platform featuring up to six Cirrus amplifiers and its latest-generation codec.

Addressing questions about revenue concentration and general market performance, Forsyth said the high percentage of revenue tied to its largest customer reflected the strength of that customer’s product launch, but he also cited “temporary factors” pressuring general market results. Those included the long-term decline in Android revenue following a strategic shift away from that segment and end-of-life dynamics in a long tail of older products serving automotive, industrial, prosumer, and imaging markets. He said Cirrus expects new products—including PC-related opportunities and other refreshed product families—to help offset those headwinds as shipments ramp across fiscal 2026 and fiscal 2027.

On PCs, Forsyth reiterated prior expectations that fiscal 2026 PC revenue would “roughly double” from the low-$10-million range in fiscal 2025, while saying it was too early to provide a fiscal 2027 figure. He added that the company is shipping with the top six laptop vendors and expects mainstream platform-driven revenue to “roughly double” in fiscal 2027. Forsyth also cited the industry’s transition toward the SDCA (SoundWire Device Class Audio) interface as a leading indicator, saying SDCA represented roughly 15% to 20% of the PC market entering the year and could be closer to 50% by the end of the calendar year, with Cirrus winning a significant share of those sockets to date.

On timing for the company’s voice-interface technology in PCs, Forsyth said the product is being sampled now and is “really going to be something that we see in calendar 2027 and 2028,” while noting related features could also be relevant in other anticipated AI devices.

In automotive, Forsyth discussed a newly announced series of haptic components designed for in-cabin interfaces and said the company sees opportunities spanning timing, audio, haptics, telematics, and other areas. While he did not provide a specific revenue target or timeline for automotive, he said that looking out to 2029, the company believes the serviceable addressable market across these areas is “certainly north of $800 million,” and reiterated that Cirrus targets new markets where it can see “multiple pathways” to building a business that could become at least 10% of company revenue over time.

Finally, on pricing, management said it has been operating in a “normalized pricing environment” and expects continued pricing adjustments over time, with supply-chain and cost improvements aimed at maintaining gross margin. Woolard noted that the prior year-over-year gross margin contraction reflected anticipated pricing reductions, which the company has worked to offset with cost reductions and efficiencies.

About Cirrus Logic (NASDAQ:CRUS)

Cirrus Logic, Inc, headquartered in Austin, Texas, is a fabless semiconductor company specializing in high-precision analog and mixed-signal processing solutions. The firm develops low-power, high-performance audio, voice, and power management integrated circuits, serving prominent consumer electronics OEMs. Its semiconductor devices are designed to enhance audio quality, battery life, and system integration in mobile phones, tablets, wireless headsets and other portable devices.

The company’s product portfolio includes digital-to-analog converters (DACs), analog-to-digital converters (ADCs), audio codecs, power management ICs, voice processors and integrated amplifiers.