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Cirrus Logic (CRUS) Crushes Q1 Earnings Estimates, Guides Strong

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Cirrus Logic (CRUS - Free Report) kick start fiscal 2022 on an impressive note, delivering better-than-anticipated first-quarter results. For the quarter, the company posted adjusted earnings of 54 cents per share, comfortably beating the Zacks Consensus Estimate of 39 cents. The bottom-line figure also came in a penny higher than the year-ago quarter earnings of 53 cents.

Revenue Details

Total revenues of $277.3 million surpassed the Zacks Consensus Estimate of $260.8 million. The top-line also grew 14%, year over year, mainly driven by higher Android-based smartphone volumes, increased laptop sales and higher content games in smartphones.

During the first quarter, rise in penetration of its audio solutions in smartphones was a positive. Additionally, strong momentum in audio and haptic solutions beyond smartphones was a tailwind for the top line.

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. price-consensus-eps-surprise-chart | Cirrus Logic, Inc. Quote

Cirrus Logic noted that it is making good progress in accelerating sales momentum and execution of strategic initiatives that will help it achieve sustainable growth over the longer term. As part of its strategic initiatives, the company is consistently focusing on deepening penetration to its Android customers and ramped up shipments for the leading laptop original equipment manufacturers (“OEMs”).

In anticipation of product launches in the latter half of 2021, the company also supported the adoption of new content during the first quarter. Management also accelerated the development of new devices that have the potential to fuel revenue growth for the company.

Cirrus Logic rearranged its reportable segments and created a separate category during fourth-quarter fiscal 2021, namely High-Performance Mixed-Signal and Audio.

The company’s High-Performance Mixed-Signal segment includes a few of Cirrus Logic’s non-audio products and accounted for 21.6% of total revenues for the fiscal first quarter. Revenues from the same division jumped 65.8% year on year to $59.9 million on solid strong demand for its camera controllers. The Audio segment sales increased 5.3% to $217.4 million and accounted for 78.4% of the total revenues.

Profits & Margins

Non-GAAP gross profit of $140.2 million climbed 9.8% on a year-over-year basis. Non-GAAP gross margin, however, contracted 200 basis points (bps) to 50.6%.

Cirrus Logic’s non-GAAP operating expenses jumped 11.7% year over year to $103.1 million.

Non-GAAP operating income of $37.1 million increased 5% year over year. However, non-GAAP operating margin of shrunk 120 bps to 13.4%.

Balance Sheet and Cash Flow

The company exited the fiscal first quarter with cash and marketable securities of $445.6 million compared with the $497.9 million seen at the end of the previous quarter.

Accounts receivables were $136.5 million compared with the $108.7 million recorded in the prior quarter. Notably, it did not report any long-term debt as of Jun 26, 2021.

Outlook

For second-quarter fiscal 2022, the company projects revenues between $430 million and $470 million. At the mid-point, the guidance suggests growth of approximately 30%, year over year. The mid-point of the revenue guidance lies way above the Zacks Consensus Estimate of $388.6 million.

Zacks Rank and Stocks to Consider

Cirrus Logic currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Digital Turbine (APPS - Free Report) , Zoom Video Communications (ZM - Free Report) and Salesforce (CRM - Free Report) , While Digital Turbine and Zoom sport a Zacks Rank #1 (Strong Buy), Salesforce carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Digital Turbine, Zoom and Salesforce is currently pegged at 50%, 16.6% and 18.4%, respectively.