Cirrus Logic, a leading provider of high-precision, low-power mixed-signal processing solutions, has reported its financial results for the fourth quarter and full fiscal year 2024. Despite facing headwinds in certain market segments, the company has demonstrated its resilience and ability to execute on its strategic initiatives.

Financials

In the fourth quarter of fiscal year 2024, Cirrus Logic delivered revenue of $378.1 million, exceeding the top end of its guidance range due to stronger-than-anticipated demand for its smartphone products. For the full fiscal year 2024, the company reported revenue of $1.79 billion, down 6% year-over-year, primarily due to a reduction in general market and custom components, particularly in non-smartphone applications.

Despite the revenue challenges, Cirrus Logic's disciplined execution allowed the company to grow both non-GAAP earnings per share year-over-year for the quarter and both GAAP and non-GAAP EPS for the full year. The company reported annual net income of $274.6 million and annual operating cash flow of $421.7 million, demonstrating its ability to generate strong financial results.

Business Overview

Cirrus Logic's growth strategy is centered around three key pillars: maintaining leadership in its core flagship smartphone audio business, expanding into areas of high-performance mixed-signal functionality in smartphones, and leveraging its audio and high-performance mixed-signal capabilities to penetrate new markets. The company has made significant progress on all three fronts during the past year.

Flagship Smartphone Audio Business

In its flagship smartphone audio business, Cirrus Logic completed the design work and delivered to its customer two next-generation products: a Boosted Amplifier and a Smart Codec. These devices represent a considerable engineering investment and are expected to launch in devices in the fall of 2024, providing meaningful advances in audio and mixed-signal processing capabilities.

High-Performance Mixed-Signal (HPMS) Areas

Beyond audio, Cirrus Logic has also made significant investments in high-performance mixed-signal (HPMS) areas, such as camera controllers, where it shipped its third-generation controller in the fall of 2023. The company also continued to develop its roadmap by taping out new camera controller IP on a new process node, laying the foundation for further advancements in this domain.

Additionally, Cirrus Logic has been investing in power and battery-related technologies and innovations, although new product introductions in these areas are expected to be further out. The company is excited about the progress it has made in the development of both key intellectual property and silicon in these areas during fiscal year 2024.

New Market Penetration

Cirrus Logic has also seen encouraging signs that its IP in audio and HPMS can be valuable and highly relevant as it reaches into new markets, most notably the laptop segment. In fiscal year 2024, the company sampled designs with and shipped a new codec, a new boosted amplifier, and a new power converter product specifically designed for the laptop market. Three of these devices were also featured as part of Intel's Lunar Lake reference design, contributing to Cirrus Logic's customers' ability to create better laptops.

While the laptop market opportunity is still in the early stages, the company is optimistic about the momentum it is building in this space. Compared to competitive alternatives, Cirrus Logic's solutions offer improved sound quality, louder playback, better battery life, and more efficient use of board space.

Financial Performance

Cirrus Logic's financial performance in the fourth quarter and full fiscal year 2024 was also noteworthy. In the fourth quarter, the company reported non-GAAP gross margin of 51.9%, which was above the high end of its guidance range, driven by supply chain efficiencies and lower freight expenses. For the full fiscal year 2024, non-GAAP gross margin was 51.3%, an increase from the prior year due to a decline in supply chain costs, including the absence of wafer premiums and lower freight expenses, partially offset by a less favorable product mix.

On the operational front, Cirrus Logic continued to focus on increasing its own efficiency and that of its supply chain. The company also returned $186 million to shareholders through share repurchases during the fiscal year, contributing to a $0.17 year-over-year increase in non-GAAP earnings per share to $6.59.

Outlook

Looking ahead, Cirrus Logic provided guidance for the first quarter of fiscal year 2025. The company expects revenue in the range of $290 million to $350 million, reflecting seasonal weakness in general market product sales and lower smartphone units. Gross margin is expected to range from 49% to 51%, with the lower end of the range due to costs associated with ramping production of the new 22-nanometer codec and boosted amplifiers.

Non-GAAP operating expense is expected to range from $118 million to $124 million, up sequentially due to an increase in product development and employee-related expenses, partially offset by lower variable compensation. The company's non-GAAP tax rate for fiscal year 2025 is expected to be approximately 22% to 24%, slightly higher than the fiscal year 2024 rate.

Geographic Revenue Breakdown

Cirrus Logic's geographic revenue breakdown for the first nine months of fiscal year 2024 shows that China accounted for 63.5% of total revenue, the United States contributed 1.1%, and the rest of the world made up the remaining 35.4%. This reflects the company's strong presence in the global smartphone market, particularly in China.

Product Line Performance

In terms of product line performance, Cirrus Logic's Audio Products segment generated $857.3 million in revenue for the first nine months of fiscal year 2024, down 8.8% year-over-year, primarily due to continued weakness in general market sales and a reduction in components shipping in tablets. The company's High-Performance Mixed-Signal (HPMS) Products segment reported revenue of $559.8 million, down 4.3% year-over-year, mainly due to a decline in components shipping in smartphones.

Conclusion

Despite the challenges in certain market segments, Cirrus Logic remains committed to its strategic initiatives and is well-positioned to capitalize on emerging opportunities, particularly in the areas of generative AI, power and battery technologies, and the laptop market. The company's strong balance sheet, with nearly $700 million in cash and cash equivalents and no debt, provides it with the financial flexibility to invest in future growth initiatives and return capital to shareholders.

Overall, Cirrus Logic's performance in fiscal year 2024 demonstrates its ability to navigate a complex market environment while continuing to execute on its long-term strategy. The company's focus on innovation, operational efficiency, and disciplined capital allocation positions it well to drive sustainable growth and create value for its shareholders.