CRUS Q1 Earnings Beat on Smartphone Demand, Revenues Match Estimates

Demand continued to be strong for custom boosted amplifiers and smart codecs. Cirrus anticipates these products will ship across multiple future smartphone generations. Development of the next-generation camera controller and a smart power IC for 3D sensing also remained on schedule.

The company’s largest customer accounted for 90% of total revenues in the fiscal first quarter.

Cirrus Logic's HPMS Sales Gain Momentum

High-Performance Mixed-Signal revenues climbed to $210.7 million from $167.2 million a year earlier and represented 46% of net sales.

Audio revenues increased 3.7% to $249 million and represented 54% of quarterly sales.

Management described the opportunity pipeline across camera, battery and power applications as one of the strongest in the company's history. A power product is already shipping in tablets, while another product for an accessory has yet to reach the market. Additional phone and non-phone programs remain in active development.

CRUS Margins Absorb Pricing Pressure

Non-GAAP gross profit was $242.1 million, with gross margin edging up to 52.7% from 52.6% a year ago. Favorable product mix supported the year-over-year comparison, while higher freight and supply-chain costs limited the improvement. Sequentially, pricing reductions outweighed cost savings.

Non-GAAP operating expenses rose 13.3% year over year to $135.4 million. Higher employee-related costs were the main driver, with variable compensation, product development and professional expenses also contributing.

Non-GAAP operating income reached $106.7 million, while operating margin slipped to 23.2% from 23.3%.

Cirrus Logic's PC Outlook Faces Delays

Cirrus lowered its fiscal 2027 PC revenue expectations. Constrained supply of a key industry platform, memory and component shortages and delayed model introductions pushed out expected growth. Management characterized these pressures as timing issues rather than a change in the underlying opportunity.

Customer interest remained strong for the company's low-power smart codec for AI-enabled PCs, with multiple designs targeted for next calendar year. Several customers also announced PCs based on NVIDIA's RTX Spark platform that are expected to ship later this year with Cirrus amplifiers and codecs.

CRUS Extends Its Mixed-Signal Reach

The company taped out a new high-performance analog front-end family for smart meters and expects to begin sampling during the September quarter. The products combine higher-accuracy voltage and current measurement with on-chip processing for power-quality analysis and fault detection.

Cirrus is targeting a calendar 2028 market launch and sees potential applications in data center DC metrology, energy storage, EV charging and grid monitoring. A new GlobalFoundries agreement secures dedicated wafer capacity and pricing for 2027 and 2028 while supporting progress toward U.S. production.

Cirrus Logic's Cash Position Funds Priorities

Cash and investments totaled $1.2 billion at quarter-end, with no debt outstanding.

Operating cash flow was $64.1 million, and free cash flow totaled $48.6 million, translating into an 11% margin.

CRUS spent $34.5 million to repurchase about 211,000 shares, leaving $239.6 million under its authorization. After quarter-end, it bought roughly 359,000 additional shares for $50.5 million. Management continues to prioritize organic investment, followed by acquisitions and buybacks, and is not considering a near-term dividend.

CRUS Guides for a Sequential Revenue Increase

For the second quarter of fiscal 2027, Cirrus expects revenues of $510-$570 million. The $540 million midpoint implies growth of 17% sequentially and a decline of 4% year over year.

GAAP gross margin is projected at 52-54%, including a temporary benefit from favorably priced wafers that should largely sell through during the quarter.

Non-GAAP operating expenses are expected at $140-$146 million.

Full-year expenses are expected to increase as Cirrus expands R&D investment, while the non-GAAP tax rate is forecast at 16-18%.

CRUS’ Zacks Rank

Cirrus Logic currently carries a Zacks Rank #4 (Sell).

 You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances

Dolby Laboratories, Inc. DLB reported third-quarter fiscal 2026 non-GAAP earnings of 69 cents per share, down 11.5% year over year but above the Zacks Consensus Estimate of 67 cents by 2.99%. Lower-than-expected operating expenses helped offset softer revenues and higher taxes. Revenues of $305 million fell 3.3% year over year and missed the consensus mark of $314 million by 2.79%. Licensing remained the core business at 93% of sales, while better-than-expected Dolby Atmos, Dolby Vision and imaging patent revenues were offset by deal timing and weaker foundational audio.

Sonos, Inc. SONO reported third-quarter fiscal 2026 non-GAAP earnings of 27 cents per share, which soared 52% year over year and topped the Zacks Consensus Estimate of 24 cents. The 12.5% surprise reflected higher sales and disciplined spending despite rising memory costs. Revenues increased 9% to $375 million, beating the $367 million consensus by 2.3%. Speaker demand and international expansion supported growth. Sonos’ installed base exceeded 53 million connected devices across more than 17 million homes.

Sony Group Corporation SONY reported earnings of ¥57.82 per share for the first quarter of fiscal 2026, up 35% year over year from ¥42.84. Adjusted net income increased 32.1% to ¥342.2 billion. Quarterly net sales advanced 8.2% to ¥2,837.8 billion. Growth was led by Imaging & Sensing Solutions and Music, while gaming profitability strengthened.

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