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01/10 16:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook. While financial performance and product innovation show positive trends, the guidance indicates a potential decline in revenue and gross margin. The Q&A highlights uncertainties in demand and management's vague responses. Share repurchases are a positive, but supply chain commitments pose risks. Overall, the sentiment is neutral, with no strong catalysts for significant stock price movement.
Revenue $407.3 million, up 9% year-over-year, primarily driven by sales associated with our latest generation products and higher smartphone unit volumes.
Non-GAAP Gross Profit $214.3 million, with a gross margin of 52.6%. Year-over-year increase in gross margin was largely due to a more favorable product mix.
Non-GAAP Operating Expense $119.5 million, up $1.5 million year-over-year, largely due to higher employee-related costs, mostly associated with annual salary increases, offset by lower product development costs.
Non-GAAP Operating Income $94.9 million or 23.3% of revenue.
Non-GAAP Net Income $80.3 million, resulting in earnings per share of $1.51.
Cash and Investments $847.8 million, up $12.9 million from the prior quarter as cash generated from operations was partially offset by share repurchases.
Inventory $279 million, down from $299.1 million in the prior quarter. Days of inventory were approximately 132 days, down sequentially.
Cash Flow from Operations $116.1 million in the June quarter. For the trailing 12-month period, cash flow from operations was $473.3 million.
CapEx $2.8 million in the June quarter, resulting in a non-GAAP free cash flow margin of 28%. For the trailing 12-month period, CapEx was $21.4 million, resulting in a non-GAAP free cash flow margin of 23%.
Share Buybacks $100 million utilized to repurchase approximately 1 million shares of common stock at an average price of $98.66. Remaining share repurchase authorization is $454.1 million.
Custom Boosted Amplifier and 22-nanometer Smart Codec: Enabled exceptional audio and voice experiences with significant power and efficiency improvements.
Camera Controller Product Line: Continued success with potential to enhance system performance and advanced camera functionality.
Next-Generation PC Amplifier and PC Codec: Designed into several new laptops expected to ship in late 2025, expanding product reach across price points.
High-Performance ADC and DAC Products: Launched 4 new products to expand accessibility across applications and price points.
Smartphone Market: Strong demand for smartphones incorporating Cirrus Logic's silicon, with new flagship Android smartphones featuring components launching in the second half of the year.
Laptop Market: Engagement with laptop customers was strong, with new products addressing audio challenges and improving voice/audio capture functionality.
Automotive Market: Began shipping latest timing product to a leading automotive customer.
Revenue Performance: Delivered $407.3 million in revenue for Q1 2026, above guidance range, driven by strong smartphone demand.
Inventory Management: Reduced inventory to $279 million, with plans to decrease further in Q2.
Cash Flow and Share Buybacks: Generated $116.1 million in cash flow from operations and repurchased $100 million in shares.
Diversification Beyond Smartphones: Investing in battery, power, and sensing R&D to expand high-performance mixed-signal footprint.
Collaboration with Compal: Addressing audio challenges in laptops to improve quality and functionality.
General Market Expansion: Ramped production of ADCs, stacks, and audio codecs for professional audio, automotive, and industrial markets.
Smartphone Market Dependency: The company's revenue is heavily reliant on the smartphone market, particularly flagship models. Any downturn in smartphone demand or shifts in consumer preferences could adversely impact revenue.
Product Mix and Pricing Environment: The company experienced a sequential decrease in gross margin due to a less favorable product mix and a return to a more typical pricing environment. This indicates vulnerability to changes in product demand and pricing pressures.
R&D Investment Risks: Significant investments in R&D for new markets and products, such as battery, power, and sensing solutions, carry the risk of delayed or unsuccessful commercialization, which could impact financial performance.
Customer Concentration: The company has a high dependency on its largest customer, and any changes in this relationship could significantly affect revenue and operations.
Inventory Management: The company is managing high inventory levels, with 132 days of inventory. This could lead to potential write-downs or inefficiencies if demand forecasts are not met.
Regulatory and Tax Changes: The company is evaluating the impact of new U.S. tax legislation, which could introduce uncertainties or additional costs.
Supply Chain Commitments: Long-term wafer purchase commitments with GlobalFoundries could pose risks if demand does not align with supply agreements, leading to excess costs or inventory.
Revenue Guidance for Q2 Fiscal 2026: Revenue is expected to range from $510 million to $570 million.
Seasonality Expectation: Sales are anticipated to be more weighted towards the first half of the fiscal year, with unit and revenue forecasts for the full fiscal year remaining relatively unchanged from previous expectations.
Gross Margin Guidance for Q2 Fiscal 2026: GAAP gross margin is expected to range from 51% to 53%.
Non-GAAP Operating Expense Guidance for Q2 Fiscal 2026: Expected to range from $131 million to $137 million.
Tax Legislation Impact: The effects of the One Big Beautiful Bill Act, which eliminates the requirement to capitalize and amortize U.S. R&D expenditures, are not yet reflected in the guidance for the September quarter as the company is still evaluating its impact.
Share Repurchase: In Q1, the company utilized $100 million to repurchase approximately 1 million shares of common stock at an average price of $98.66. At the end of Q1 fiscal year 2026, $454.1 million remained on the share repurchase authorization.
The company reported a 4% YoY revenue increase and a solid gross margin of 52.5%, but concerns arise from its heavy reliance on the smartphone market and potential R&D delays. The Q&A revealed management's reluctance to provide specifics on new opportunities, adding uncertainty. The share repurchase program is a positive, yet broader economic risks and supply chain issues persist. With mixed signals from strong financials and cautious guidance, a neutral stock price movement is likely.
The earnings call presents a mixed outlook. While financial performance and product innovation show positive trends, the guidance indicates a potential decline in revenue and gross margin. The Q&A highlights uncertainties in demand and management's vague responses. Share repurchases are a positive, but supply chain commitments pose risks. Overall, the sentiment is neutral, with no strong catalysts for significant stock price movement.
The earnings call summary presents strong financial performance with record revenues and increased earnings per share. The company also announced significant share repurchases, which is a positive signal. Guidance is optimistic, and there is a focus on expanding into new markets. The Q&A section highlights growth opportunities in PCs and automotive, despite some uncertainties in timing. Overall, the combination of strong results, positive guidance, and strategic growth initiatives suggests a positive stock price movement.
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