CIRRUS LOGIC INC
For the period ended Sep 28, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Nov 4, 2024
CRUS$113.58+3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-08-06.
0000772406-24-000057
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-11-04.
0000772406-24-000065
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 49 previous paragraphs and 55 current paragraphs.
30 unchanged; 18 reworded; 7 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Net sales for the second quarter of fiscal year 2025 increased $60.8 million, or 13 percent, to $541.9 million from $481.1 million in the second quarter of fiscal year 2024. Net sales from our audio products increased $33.7 million, primarily driven by higher smartphone unit volumes and increased revenue associated with next-generation products. Net sales from HPMS products increased $27.1 million for the quarter versus the second quarter of fiscal year 2024, primarily due to higher smartphone unit volumes and, to a lesser extent, revenue associated with next-generation products. Additionally, the second quarter of fiscal 2025 began and ended one week later than the comparable quarter in the prior year. Thus, it encompassed one week more of the higher-volume production associated with typical seasonal product ramps.
Current report
Gross margin was 51.5 percent for the first six months of fiscal year 2025, up from 50.9 percent for the first six months of fiscal year 2024 due to a more favorable product mix, and, to a lesser extent, reduced freight costs, partially offset by higher inventory reserves, as well as costs associated with new product ramps.
Current report
Research and development expense for the first six months of fiscal year 2025 was $218.3 million, an increase of $7.9 million, from $210.4 million for the first six months of fiscal year 2024 primarily due to increased variable compensation, facilities-related and employee-related costs, partially offset by reduced acquisition-related costs and an investment write-off that occurred in the first quarter of fiscal year 2024.
Current report
Selling, general and administrative expense for the first six months of fiscal year 2025 was $74.6 million, an increase of $4.9 million, from $69.7 million for the first six months of fiscal year 2024, primarily due to increased variable compensation costs, employee-related expenses, and lease impairment costs for the period.
Current report
Restructuring
Current report
In fiscal year 2024, the Company recorded costs related to a workforce reduction action taken in the second quarter of fiscal year 2024. Restructuring costs for the second quarter and first six months of fiscal year 2024 were $2.3 million. See Note 10 - Restructuring Costs for additional information.
Current report
Other Income (Expense)
Removed paragraphs (1)
Reworded paragraphs (18)
Previous wording
The Company remains committed to our three-pronged strategy for growing our business: first, maintaining our leadership position in smartphone audio; second, increasing HPMS content in smartphones; and third, leveraging our strength in audio and HPMS to expand into additional applications and markets with new and existing components. During the first quarter of fiscal year 2025, we continued to execute on these strategic initiatives, as we began ramping our next-generation custom audio components, saw positive design momentum in laptops, and introduced new general market products.
Current wording
The Company remains committed to our three-pronged strategy for growing our business: first, maintaining our leadership position in smartphone audio; second, increasing HPMS content in smartphones; and third, leveraging our strength in audio and HPMS to expand into additional applications and markets with new and existing components. During the second quarter of fiscal year 2025, we continued to execute on these strategic initiatives. Our next-generation custom boosted amplifier and our first 22-nanometer smart codec started shipping in recently launched smartphones. We also passed key milestones related to our laptop business as we secured our first high-volume mainstream design win with our latest PC codec and began shipping our first power product specifically designed for laptops in multiple tier-one customers’ devices; one of these new devices includes eight Cirrus Logic components. While we are in the early stages of revenue contribution from our recently introduced laptop components, we are pleased with our progress to date.
Previous wording
There have been no significant changes during the three months ended June 29, 2024, to the information provided under the headings “Critical Accounting Estimates” and "Summary of Significant Accounting Policies" included in our fiscal year 2024 Annual Report on Form 10-K for the fiscal year ended March 30, 2024.
Current wording
There have been no significant changes during the three and six months ended September 28, 2024, to the information provided under the headings “Critical Accounting Estimates” and "Summary of Significant Accounting Policies" included in our fiscal year 2024 Annual Report on Form 10-K for the fiscal year ended March 30, 2024.
Previous wording
The following table summarizes the results of our operations for the first quarter of fiscal years 2025 and 2024, respectively, as a percentage of net sales. All percentage amounts were calculated using the underlying data in thousands, unaudited:
Current wording
The following table summarizes the results of our operations for thethree and six months of fiscal years 2025 and 2024, respectively, as a percentage of net sales. All percentage amounts were calculated using the underlying data in thousands, unaudited:
Previous wording
Net sales for the first quarter of fiscal year 2025 increased $57.0 million, or 18 percent, to $374.0 million from $317.0 million in the first quarter of fiscal year 2024. Net sales from our audio products increased $23.2 million, primarily driven by higher smartphone unit volumes. Net sales from HPMS products increased $33.8 million for the quarter versus the first quarter of fiscal year 2024, primarily due to higher volumes and content gains in smartphones, partially offset by continued lower general market sales.
Current wording
Net sales for the first six months of fiscal year 2025 increased $117.8 million, or 15 percent, to $915.9 million from $798.1 million for the first six months of fiscal year 2024. Net sales from our audio products increased $56.9 million, primarily driven by higher smartphone unit volumes and sales associated with next-generation products, partially offset by lower general market sales. Net sales from HPMS products increased $60.9 million for the year versus the first six months of fiscal year 2024, primarily due to higher smartphone unit volumes and sales associated with next-generation products, partially offset by lower general market sales.
Previous wording
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately 99 percent of net sales for the first quarters of fiscal years 2025 and 2024, respectively. Our sales are denominated primarily in U.S. dollars.
Current wording
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately 100 percent and 99 percent of net sales for the second quarters of fiscal years 2025 and 2024, respectively, and 99 percent for each of the first six month periods of fiscal years 2025 and 2024. Our sales are denominated primarily in U.S. dollars.
Previous wording
Since the components we produce are largely proprietary, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may purchase our products directly from us, through distributors, or third-party manufacturers contracted to produce their designs. For the first quarter of fiscal years 2025 and 2024, our ten largest end customers represented approximately 96 percent and 93 percent, respectively, of our net sales.
Current wording
Since the components we produce are largely proprietary, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may purchase our products directly from us, through distributors, or third-party manufacturers contracted to produce their designs. For the second quarter of fiscal years 2025 and 2024, our ten largest end customers represented approximately 97 percent and 95 percent, respectively, of our net sales, and 96 percent and 94 percent of our net sales for the first six months of fiscal years 2025 and 2024, respectively.
Previous wording
We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 88 percent and 83 percent of the Company’s total net sales for the first quarter of fiscal years 2025 and 2024, respectively.
Current wording
We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 90 percent and 88 percent of the Company’s total net sales for the second quarter of fiscal years 2025 and 2024, respectively, and 89 percent and 86 percent for the first six months of fiscal years 2025 and 2024, respectively.
Previous wording
No other end customer or distributor represented more than 10 percent of net sales for the three months ended June 29, 2024 or June 24, 2023.
Current wording
No other end customer or distributor represented more than 10 percent of net sales for the three and six months ended September 28, 2024 or September 23, 2023.
Previous wording
Gross margin was 50.5 percent in the first quarter of fiscal year 2025, up slightly from 50.3 percent in the first quarter of fiscal year 2024.
Current wording
Gross margin was 52.2 percent in the second quarter of fiscal year 2025, up from 51.3 percent in the second quarter of fiscal year 2024, largely due to a favorable product mix, offset in part by higher supply chain costs versus the prior period.
Previous wording
Research and development expense for the first quarter of fiscal year 2025 was $105.4 million, a decrease of $0.9 million, from $106.2 million in the first quarter of fiscal year 2024. Significant drivers of the decrease included reduced acquisition-related costs and product development costs, offset by increased variable compensation and facilities-related expenses for the quarter.
Current wording
Research and development expense for the second quarter of fiscal year 2025 was $112.9 million, an increase of $8.7 million, from $104.2 million in the second quarter of fiscal year 2024. Significant drivers of the increase included increased variable compensation, employee-related, facilities-related and product development costs, offset by reduced acquisition-related expenses in the current quarter.
Previous wording
Selling, general and administrative expense for the first quarter of fiscal year 2025 was $36.8 million, an increase of $1.4 million, from $35.4 million in the first quarter of fiscal year 2024, due to increased variable compensation expense and lease impairment driven by refined sublease assumptions for previously vacated office space in Austin,Texas, partially offset by reduced stock-based compensation costs.
Current wording
Selling, general and administrative expense for the second quarter of fiscal year 2025 was $37.8 million, an increase of $3.5 million, from $34.3 million in the second quarter of fiscal year 2024, due to increased employee-related and variable compensation expenses.
Previous wording
The Company reported interest income of $8.4 million and $4.8 million, for the three months ended June 29, 2024 and June 24, 2023, respectively. Interest income increased in the current period due to higher yields on higher combined average cash, cash equivalents and marketable securities balances, compared to the prior period.
Current wording
The Company reported interest income of $8.4 million and $16.8 million for the three and six months ended September 28, 2024, respectively, and $4.0 million and $8.8 million for the three and six months ended September 23, 2023, respectively. Interest income increased in the current period due to higher yields on higher combined average cash, cash equivalents and marketable securities balances, compared to the prior period.
Previous wording
The Company reported interest expense of $0.2 million for each of the three months ended June 29, 2024 and June 24, 2023. Interest expense consists primarily of commitment fees associated with the Company's Revolving Credit Facility (see Note 8 - Revolving Credit Facility of the Notes to the Consolidated Condensed Financial Statements).
Current wording
The Company reported interest expense of $0.2 million and $0.5 million for the three and six months ended September 28, 2024, respectively, and $0.2 million and $0.5 million for the three and six months ended September 23, 2023, respectively. Interest expense consists primarily of commitment fees associated with the Company's Revolving Credit Facility (see Note 8 - Revolving Credit Facility of the Notes to the Consolidated Condensed Financial Statements).
Previous wording
For the three months ended June 29, 2024 and June 24, 2023, the Company reported other income of $1.6 million and $0.4 million, respectively. This activity primarily related to non-investment related income and remeasurement on foreign currency denominated monetary assets and liabilities.
Current wording
For the three and six months ended September 28, 2024, the Company reported other income of an immaterial amount and $1.6 million, respectively, and $0.1 million of other expense and $0.3 million of other income for the three and six months ended September 23, 2023, respectively. This activity primarily related to non-investment related income and remeasurement on foreign currency denominated monetary assets and liabilities.
Previous wording
Our income tax expense for the first quarter of fiscal year 2025 was $14.5 million compared to $7.2 million for the first quarter of fiscal year 2024, resulting in effective tax rates of 25.6 percent and 31.5 percent, respectively. Effective tax rates for all periods shown were unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires R&D expenditures incurred in tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted, resulting in higher GILTI, which is treated as a period cost. In addition, our effective tax rates were unfavorably impacted by U.S. tax rules related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, that reduce the amount of foreign tax credits available to offset GILTI. Our effective tax rates for the first quarter of fiscal year 2025 and 2024 were higher than the federal statutory rate primarily due to these two items, partially offset by the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate.
Current wording
Our income tax expense for the second quarter of fiscal year 2025 was $37.9 million compared to $34.0 million for the second quarter of fiscal year 2024, resulting in effective tax rates of 27.0 percent and 31.1 percent, respectively. Our income tax expense was $52.4 million and $41.2 million for the first six months of fiscal years 2025 and 2024, respectively, resulting in effective tax rates of 26.6 percent and 31.1 percent, respectively. Effective tax rates for all periods presented were unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires R&D expenditures incurred in tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted, resulting in higher GILTI, which is treated as a period cost. In addition, our effective tax rates for all periods presented were unfavorably impacted by U.S. tax rules related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, that reduce the amount of foreign tax credits available to offset GILTI. Our effective tax rates for the periods presented were higher than the federal statutory rate primarily due to these two items, partially offset by the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate.
Previous wording
Cash used in or generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations was $87.2 million for the first three months of fiscal year 2025 versus $39.8 million used during the corresponding period of fiscal year 2024. The cash flow from operations during the first three months of fiscal year 2025 was related to the cash components of our net income and a $16.1 million favorable change in working capital, primarily as a result of increases in income taxes payable, accounts payable and other accrued liabilities and prepaid wafer usage (related to the Capacity Reservation Agreement), partially offset by increases in accounts receivables. The cash flow used in operations during the corresponding period of fiscal year 2024 was related to the cash components of our net income and an $82.0 million unfavorable change in working capital, primarily as a result of an increase in inventory and accounts receivables, partially offset by an increase in income taxes payable.
Current wording
Cash used in or generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations was $95.4 million for the first six months of fiscal year 2025 versus $62.5 million used during the corresponding period of fiscal year 2024. The cash flow from operations during the first six months of fiscal year 2025 was related to the cash components of our net income and a $117.9 million unfavorable change in working capital, primarily as a result of increases in accounts receivables and inventory, partially offset by increases in accounts payable and other accrued liabilities, prepaid wafer usage (related to the Capacity Reservation Agreement), and income taxes payable. The cash flow used in operations during the corresponding period of fiscal year 2024 was related to the cash components of our net income and a $216.5 million unfavorable change in working capital, primarily as a result of an increase in accounts receivables and inventory and a decrease in acquisition-related liabilities, partially offset by prepaid wafer usage (related to the Capacity Reservation Agreement) beginning in the second quarter of fiscal year 2024.
Previous wording
Net cash used in investing activities was $66.6 million during the first three months of fiscal year 2025 versus $14.6 million during the first three months of fiscal year 2024. The cash used in investing activities in the first three months of fiscal year 2025 was related to capital expenditures of $10.1 million and net purchases of marketable securities of $56.4 million. The cash used in investing activities in the corresponding period in fiscal year 2024 was related to capital expenditures and technology investments of $12.3 million and net purchases of marketable securities of $2.3 million.
Current wording
Net cash used in investing activities was $72.0 million during the first six months of fiscal year 2025 versus $23.8 million during the first six months of fiscal year 2024. The cash used in investing activities in the first six months of fiscal year 2025 was related to capital expenditures of $12.9 million and net purchases of marketable securities of $59.2 million. The cash used in investing activities in the corresponding period in fiscal year 2024 was related to capital expenditures and technology investments of $20.8 million and net purchases of marketable securities of $2.9 million.
Previous wording
Net cash used in financing activities was $32.0 million during the first three months of fiscal year 2025 and was primarily associated with stock repurchases for the period of $41.0 million, partially offset by $9.0 million in net proceeds from the issuance of common stock, primarily related to stock option exercises. The cash used in financing activities during the first three months of fiscal year 2024 of $39.0 million was primarily associated with stock repurchases during the period of $38.5 million.
Current wording
Net cash used in financing activities was $80.4 million during the first six months of fiscal year 2025 and was primarily associated with stock repurchases for the period of $91.0 million, partially offset by $10.6 million in net proceeds from the issuance of common stock, primarily related to stock option exercises. The cash used in financing activities during the first six months of fiscal year 2024 of $81.6 million was primarily associated with stock repurchases during the period of $79.1 million.