CIRRUS LOGIC, INC.

Previous wording

This Quarterly Report on Form 10-Q including Management’s Discussion and Analysis of Financial Condition and Results of Operations and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on expectations, estimates, forecasts and projections and the beliefs and assumptions of our management as of the filing of this Form 10-Q. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” “intend,” and variations of these types of words and similar expressions which are intended to identify these forward-looking statements. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and readers should not place undue reliance on such statements. We undertake no obligation, and expressly disclaim any duty, to revise or update publicly any forward-looking statement for any reason.

Current wording

This Quarterly Report on Form 10-Q including Management’s Discussion and Analysis of Financial Condition and Results of Operations and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on expectations, estimates, forecasts and projections and the beliefs and assumptions of our management as of the filing of this Form 10-Q. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” “intend,” and variations of these types of words and similar expressions which are intended to identify these forward-looking statements. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and readers should not place undue reliance on such statements. We undertake no obligation, and expressly disclaim any duty, to revise or update publicly any forward-looking statement for any reason, except as required by law.

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 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.

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 2026, we continued to execute on these strategic initiatives. We were delighted to see multiple smartphone customers introduce their latest generation devices featuring our audio and HPMS components. Outside of smartphones, we continued to execute on our plan to grow market share in the PC market. Progress in this space included securing our first mainstream consumer laptop design, expanding our collaboration with leading System-on-a-Chip (SoC) vendors, and developing new products with superior voice and audio capture capabilities. Additionally, we continue to focus on our general market business. During the quarter, we gained design momentum with customers on our latest-generation ADCs, DACs, and ultra-high-performance audio codec. We also received positive initial feedback on our family of analog front-end components targeting imaging applications and saw increased engagement on our latest timing product family. Looking forward, we are optimistic about the opportunities ahead of us as we continue to seek to leverage our mixed-signal design and signal processing expertise to diversify our product portfolio and expand our addressable market.

Previous 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.

Current wording

There have been no significant changes during the three and six months ended September 27, 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

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:

Current wording

The following table summarizes the results of our operations for thethree and six 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 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.

Current wording

Net sales for the second quarter of fiscal year 2026 increased $19.1 million, or 4 percent, to $561.0 million from $541.9 million in the second quarter of fiscal year 2025. Net sales from our audio products increased $1.6 million, primarily driven by higher smartphone unit volumes in the second quarter of fiscal year 2026 and sales associated with latest-generation products, partially offset by declines in average sales prices (“ASPs”). Net sales from HPMS products increased $17.5 million for the quarter versus the second quarter of fiscal year 2025, primarily due to higher general market sales, smartphone unit volumes and sales associated with latest-generation products, partially offset by declines in ASPs.

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 2026 and 2025. 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 and 100 percent of net sales for the second quarters of fiscal years 2026 and 2025, respectively, and 99 percent for each of the first six month periods 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 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.

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 each of the second quarters of fiscal years 2026 and 2025, our ten largest end customers represented approximately 97 percent, of our net sales, and 97 percent and 96 percent of our net sales for the first six months of fiscal years 2026 and 2025, respectively.

Previous 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.

Current wording

We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 90 percent of the Company’s total net sales for each of the second quarters of fiscal years 2026 and 2025, and 88 percent and 89 percent for the first six months 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 months ended June 28, 2025 or June 29, 2024.

Current wording

No other end customer or distributor represented more than 10 percent of net sales for the three and six months ended September 27, 2025 or September 28, 2024.

Previous 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.

Current wording

Gross margin was 52.5 percent in the second quarter of fiscal year 2026, up from 52.2 percent in the second quarter of fiscal year 2025, largely due to a more favorable product mix, partially offset by higher inventory reserves.

Previous 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.

Current wording

Research and development expense for the second quarter of fiscal year 2026 was $110.0 million, a decrease of $2.9 million, from $112.9 million in the second 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

Selling, general and administrative expense for the first quarter of fiscal year 2026 was $38.7 million, an increase of $2.0 million, from $36.8 million in the first quarter of fiscal year 2025, due primarily to increased stock-based compensation and employee-related expenses. The increase was partially offset by the absence in the first quarter of fiscal year 2026 of lease impairment costs incurred during the first quarter of fiscal year 2025, related to refined sublease assumptions for previously vacated office space.

Current wording

Selling, general and administrative expense for the first six months of fiscal year 2026 was $78.3 million, an increase of $3.8 million, from $74.6 million for the first six months of fiscal year 2025, primarily due to increased stock-based compensation and employee-related expenses, partially offset by the non-recurring lease impairment costs related to the prior comparable period.

Previous 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.

Current wording

The Company reported interest income of $8.9 million and $17.8 million for the three and six months ended September 27, 2025, respectively, and $8.4 million and $16.8 million for the three and six months ended September 28, 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 $0.2 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).

Current wording

The Company reported interest expense of $0.2 million and $0.5 million for the three and six months ended September 27, 2025, respectively, and $0.2 million and $0.5 million for the three and six months ended September 28, 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 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.

Current wording

For the three and six months ended September 27, 2025, the Company reported other expense of $0.1 million and $0.5 million, respectively. For the three and six months ended September 28, 2024, the Company reported other income of an immaterial amount and $1.6 million, 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 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.

Current wording

Our income tax expense for the second quarter of fiscal year 2026 was $21.8 million compared to $37.9 million for the second quarter of fiscal year 2025, resulting in effective tax rates of 14.2 percent and 27.0 percent, respectively. Our income tax expense was $41.7 million and $52.4 million for the first six months of fiscal years 2026 and 2025, respectively, resulting in effective tax rates of 17.8 percent and 26.6 percent, respectively.

Previous wording

Effective tax rates for all periods presented were unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that requires research and development ("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. 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.

Current wording

Effective tax rates for fiscal year 2025 were unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 that required research and development (“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, which resulted in increased GILTI inclusions in these periods. In addition, those periods 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.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA includes a broad range of tax reform provisions, including the permanent elimination of the requirement to capitalize and amortize U.S. R&D expenditures, modifications to international tax provisions, and the permanent extension of certain expiring provisions initially established by the Tax Cuts and Jobs Act of 2017. The OBBBA has multiple effective dates, with certain provisions effective in fiscal year 2026 and others effective in fiscal year 2027. We are assessing the legislation and its effect on our consolidated financial statements, which we expect to begin reflecting in the second quarter of fiscal year 2026.

Current wording

The effective tax rates for the second quarter and first six months of fiscal year 2026 were lower than the prior periods presented due to the current quarter enactment of the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025. The OBBBA includes a broad range of tax reform provisions and extends or modifies several provisions initially enacted by the Tax Cuts and Jobs Act of 2017. Beginning with fiscal year 2026, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S. R&D expenditures. A number of other provisions of the OBBBA, including modifications to existing international tax provisions, will take effect in fiscal year 2027.

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 $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.

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 $208.3 million for the first six months of fiscal year 2026 versus $95.4 million generated for the corresponding period of fiscal year 2025. The cash flow from operations during the first six months of fiscal year 2026 was related to the cash components of our net income and a $52.8 million unfavorable change in working capital, primarily as a result of an increase in accounts receivables and decreases in income taxes payables, partially offset by decreases in inventory, and increases in prepaid wafer usage (related to the Capacity Reservation Agreement) and 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 $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.

Previous 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.

Current wording

Net cash used in investing activities was $14.1 million during the first six months of fiscal year 2026 versus $72.0 million during the first six months of fiscal year 2025. The cash used in investing activities in the first six months of fiscal year 2026 was related to net purchases of marketable securities of $6.9 million and capital expenditures and technology investments of $7.3 million. The cash used in investing activities in the corresponding period in fiscal year 2025 was related to net purchases of marketable securities of $59.2 million and capital expenditures and technology investments of $12.9 million.

Previous 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.

Current wording

Net cash used in financing activities was $140.3 million during the first six months of fiscal year 2026 and was primarily associated with stock repurchases for the period of $140.0 million. The cash used in financing activities during the first six months of fiscal year 2025 of $80.4 million was primarily associated with stock repurchases during 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.