CIRRUS LOGIC, INC.

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 third quarter of fiscal year 2025, we continued to execute on these strategic initiatives. We saw strong demand for products shipping into smartphones, including our latest-generation custom boosted amplifier and our first 22-nanometer smart codec, and we continued to gain momentum in laptops. Recent highlights in our PC-focused business include being featured as part of the Intel Arrow Lake reference design, sampling our latest amplifier and codec specifically designed for laptops, and expanding the breadth of content across a variety of new devices. Finally, we began sampling a series of timing products designed for automotive and professional audio applications.

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 first quarter of fiscal year 2026, we continued to execute on these strategic initiatives. We were delighted with the success of our latest-generation smartphone audio components, including our custom boosted amplifier and first 22-nanometer smart codec. Outside of smartphones, we continued to gain traction in the laptop market. In the June quarter, our next-generation amplifier and codec were designed into several new laptops, we announced a collaboration with Compal to address persistent audio quality challenges, and we continued development on multiple new laptop components. Progress in our general market business, which spans the professional audio, automotive, industrial, and imaging end markets, included ramping production of our latest-generation analog-to-digital converters (ADCs), digital-to-analog converters (DACs), and an ultra-high-performance audio codec. Finally, we also began shipping our recently-introduced timing product to an automotive customer.

Previous wording

There have been no significant changes during the three and nine months ended December 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.

Current wording

There have been no significant changes during the three months ended June 28, 2025, to the information provided under the headings “Critical Accounting Estimates” and "Summary of Significant Accounting Policies" included in our fiscal year 2025 Annual Report on Form 10-K for the fiscal year ended March 29, 2025.

Previous wording

Our fiscal year is the 52- or 53-week period ending on the last Saturday in March. Fiscal year 2025 is a 52-week fiscal year. Fiscal year 2024 was a 53-week fiscal year, including a 14-week fiscal third quarter. Therefore, the three and nine month periods ended December 30, 2023 included an additional week, as compared to the current fiscal year 2025 periods.

Current wording

Our fiscal year is the 52- or 53-week period ending on the last Saturday in March. Fiscal years 2026 and 2025 are 52-week fiscal years.

Previous wording

The following table summarizes the results of our operations for thethree and nine 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:

Current wording

The following table summarizes the results of our operations for thethree months of fiscal years 2026 and 2025, 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 nine months of fiscal year 2025 increased $54.6 million, or 4 percent, to $1.5 billion from $1.4 billion for the first nine months of fiscal year 2024. Net sales from our audio products increased $24.6 million, primarily driven by sales associated with latest-generation products and higher smartphone unit volumes, partially offset by lower general market sales. Net sales from HPMS products increased $30.0 million for the year versus the first nine months of fiscal year 2024, primarily due to higher content in smartphones and sales associated with latest-generation products, partially offset by lower general market sales.

Current wording

Net sales for the first quarter of fiscal year 2026 increased $33.2 million, or 9 percent, to $407.3 million from $374.0 million in the first quarter of fiscal year 2025. Net sales from our audio products increased $21.1 million, primarily driven by sales associated with latest-generation products and higher smartphone unit volumes in the first quarter of fiscal year 2026. Net sales from HPMS products increased $12.2 million for the quarter versus the first quarter of fiscal year 2025, primarily due to higher smartphone unit volumes and sales associated with latest-generation products.

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 third quarters of fiscal years 2025 and 2024, and for each of the first nine month periods of fiscal years 2025 and 2024. 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 99 percent of net sales for the first quarters of fiscal years 2026 and 2025. 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 each of the third quarters of fiscal years 2025 and 2024, our ten largest end customers represented approximately 96 percent, of our net sales, and 96 percent and 95 percent of our net sales for the first nine months of fiscal years 2025 and 2024, respectively.

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 first quarter of fiscal years 2026 and 2025, our ten largest end customers represented approximately 95 percent and 96 percent, of our net sales, respectively.

Previous wording

We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 91 percent and 89 percent of the Company’s total net sales for the third quarter of fiscal years 2025 and 2024, respectively, and 90 percent and 87 percent for the first nine months 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 86 percent and 88 percent of the Company’s total net sales for the first quarter of fiscal years 2026 and 2025, respectively.

Previous wording

No other end customer or distributor represented more than 10 percent of net sales for the three and nine months ended December 28, 2024 or December 30, 2023.

Current wording

No other end customer or distributor represented more than 10 percent of net sales for the three months ended June 28, 2025 or June 29, 2024.

Previous wording

Gross margin was 53.6 percent in the third quarter of fiscal year 2025, up from 51.3 percent in the third quarter of fiscal year 2024, largely due to a shift in mix toward higher margin products, partially offset by higher inventory reserves and supply chain costs.

Current wording

Gross margin was 52.6 percent in the first quarter of fiscal year 2026, up from 50.5 percent in the first quarter of fiscal year 2025, largely due to a more favorable product mix.

Previous wording

Research and development expense for the third quarter of fiscal year 2025 was $113.0 million, an increase of $0.3 million, from $112.7 million in the third quarter of fiscal year 2024. Significant drivers included increased employee-related costs, partially offset by reduced stock-based compensation costs and increased R&D incentives in the current quarter.

Current wording

Research and development expense for the first quarter of fiscal year 2026 was $102.9 million, a decrease of $2.5 million, from $105.4 million in the first quarter of fiscal year 2025. Significant drivers included reduced stock-based compensation and product development costs, partially offset by increased employee-related costs in the current quarter.

Previous wording

The Company reported interest income of $8.4 million and $25.2 million for the three and nine months ended December 28, 2024, respectively, and $5.1 million and $13.9 million for the three and nine months ended December 30, 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 $8.8 million and $8.4 million for the three months ended June 28, 2025 and June 29, 2024, respectively. Interest income increased in the current period due to returns generated from 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 and $0.7 million for the three and nine months ended December 28, 2024, respectively, and $0.2 million and $0.7 million for the three and nine months ended December 30, 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).

Current wording

The Company reported interest expense of $0.2 million and $0.2 million for the three months ended June 28, 2025 and June 29, 2024, 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 and nine months ended December 28, 2024, the Company reported other expense of $0.2 million and $1.4 million in other income, respectively, and $0.3 million and an immaterial amount of other expense for the three and nine months ended December 30, 2023, 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 months ended June 28, 2025 and June 29, 2024, the Company reported other expense of $0.4 million and $1.6 million in other income, respectively. This activity primarily related to non-investment related income (expense) and remeasurement on foreign currency denominated monetary assets and liabilities.

Previous wording

Our income tax expense for the third quarter of fiscal year 2025 was $37.7 million compared to $33.4 million for the third quarter of fiscal year 2024, resulting in effective tax rates of 24.5 percent and 19.4 percent, respectively. Our income tax expense was $90.1 million and $74.5 million for the first nine months of fiscal years 2025 and 2024, respectively, resulting in effective tax rates of 25.7 percent and 24.5 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 third quarter of fiscal year 2025 and the first nine months of fiscal years 2025 and 2024, respectively, 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. Our effective tax rate for the third quarter of fiscal year 2024 was lower than the federal statutory rate due to a one-time tax benefit recorded during that period for a change in capitalized R&D expenditures that decreased GILTI inclusions in our fiscal year 2023 U.S. tax return.

Current wording

Our income tax expense for the first quarter of fiscal year 2026 was $19.9 million compared to $14.5 million for the first quarter of fiscal year 2025, resulting in effective tax rates of 24.7 percent and 25.6 percent, respectively.

Previous wording

Cash generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations was $314.0 million for the first nine months of fiscal year 2025 versus $251.1 million generated for the corresponding period of fiscal year 2024. The cash flow from operations during the first nine months of fiscal year 2025 was related to the cash components of our net income and a $57.4 million unfavorable change in working capital, primarily as a result of increases in accounts receivables and inventory, partially offset by increases in prepaid wafer usage (related to the Capacity Reservation Agreement), income taxes payable, and accounts payable and other accrued liabilities. The cash flow from operations during the corresponding period of fiscal year 2024 was related to the cash components of our net income and an $87.4 million unfavorable change in working capital, primarily as a result of an increase in accounts receivables and inventory and decreases in accounts payable and other accrued liabilities and acquisition-related liabilities, partially offset by prepaid wafer usage (related to the Capacity Reservation Agreement) beginning in the second quarter of fiscal year 2024.

Current wording

Cash generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations was $116.1 million for the first three months of fiscal year 2026 versus $87.2 million generated for the corresponding period of fiscal year 2025. The cash flow from operations during the first three months of fiscal year 2026 was related to the cash components of our net income and a $27.4 million favorable change in working capital, primarily as a result of decreases in inventory, increases in prepaid wafer usage (related to the Capacity Reservation Agreement) and income taxes payable, partially offset by decreases in accounts payable and other accrued liabilities. The cash flow from operations during the corresponding period 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.

Previous wording

Net cash used in investing activities was $111.2 million during the first nine months of fiscal year 2025 versus $60.8 million during the first nine months of fiscal year 2024. The cash used in investing activities in the first nine months of fiscal year 2025 was related to net purchases of marketable securities of $91.6 million and capital expenditures and technology investments of $19.6 million. The cash used in investing activities in the corresponding period in fiscal year 2024 was related to capital expenditures and technology investments of $30.7 million and net purchases of marketable securities of $30.1 million.

Current wording

Net cash used in investing activities was $6.2 million during the first three months of fiscal year 2026 versus $66.6 million during the first three months of fiscal year 2025. The cash used in investing activities in the first three months of fiscal year 2026 was related to net purchases of marketable securities of $3.4 million and capital expenditures and technology investments of $2.8 million. The cash used in investing activities in the corresponding period in fiscal year 2025 was related to net purchases of marketable securities of $56.4 million and capital expenditures and technology investments of $10.1 million.

Previous wording

Net cash used in financing activities was $179.1 million during the first nine months of fiscal year 2025 and was primarily associated with stock repurchases for the period of $161.0 million. The cash used in financing activities during the first nine months of fiscal year 2024 of $152.2 million was primarily associated with stock repurchases during the period of $136.0 million.

Current wording

Net cash used in financing activities was $100.7 million during the first three months of fiscal year 2026 and was primarily associated with stock repurchases for the period of $100.0 million. The cash used in financing activities during the first three months of fiscal year 2025 of $32.0 million was primarily associated with stock repurchases during 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.

Previous wording

See Note 8 — Revolving Credit Facility for additional information including material terms and related covenants.

Current wording

See Note 8 — Revolving Credit Facility of the Notes to the Consolidated Condensed Financial Statements for additional information including material terms and related covenants.