Record Revenue Driven by High-Performance Mixed-Signal Content Gains in Smartphones

Cirrus Logic, Inc. (NASDAQ:CRUS) today posted on its website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2022, which ended Dec. 25, 2021, as well as the company's current business outlook.

"Cirrus Logic reported record revenue in the December quarter, above the top end of our guidance, driven by significant contributions from the expanded high-performance mixed-signal content shipping into smartphones and strong overall demand for our products," said John Forsyth, Cirrus Logic president and chief executive officer. "These results reflect our continued momentum in FY22 and mark another milestone in the execution of our strategy to diversify our product and technology portfolio. Building on our success over the past few years, we are investing in additional technologies targeting new opportunities for incremental content, including the areas of sensing, power, and battery systems. Moving forward, we believe we are well-positioned to increase the diversity of our business and drive long-term revenue growth."

Reported Financial Results – Third Quarter FY22

Revenue of $548.3 million;
GAAP gross margin of 52.8 percent and non-GAAP gross margin of 52.8 percent;
GAAP operating expenses of $145.3 million and non-GAAP operating expenses of $115.5 million; and
GAAP earnings per share of $2.16 and non-GAAP earnings per share of $2.54.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY22

Revenue is expected to range between $400 million and $440 million;
GAAP gross margin is forecasted to be between 51 percent and 53 percent; and
Combined GAAP R&D and SG&A expenses are anticipated to range between $150 million and $156 million, including approximately $19 million in stock-based compensation expense, $8 million in amortization of acquired intangibles and $3 million in acquisition-related costs.

Cirrus Logic will host a live Q&A session at 5 p.m. EST today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email investor@cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (416) 621-4642, or toll-free at (800) 585-8367 (Access Code: 3871289).

Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world's top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture. Check us out at www.cirrus.com.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, and effective tax rate. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about our ability to diversify our product and technology portfolios and drive long-term revenue growth, , and our estimates for the fourth quarter fiscal year 2022 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. In some cases, forward-looking statements are identified by words such as "expect," "anticipate," "target," "project," "believe," "goals," "opportunity," "estimates," "intend," and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; the risks of doing business internationally, including increased import/export restrictions and controls (e.g., the effect of the U.S. Bureau of Industry and Security of the U.S. Department of Commerce placing Huawei Technologies Co., Ltd. and certain of its affiliates on the Bureau's Entity List), imposition of trade protection measures (e.g., tariffs or taxes), security and health risks, possible disruptions in transportation networks, and other economic, social, military and geo-political conditions in the countries in which we, our customers or our suppliers operate; recent increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; our ability to attract, hire, and retain qualified personnel to support the development, marketing, and sales of our products; the level of orders and shipments during the fourth quarter of fiscal year 2022, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 28, 2021 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary financial data follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)


	Three Months Ended									Nine Months Ended
	Dec. 25,			Sep. 25,			Dec. 26,			Dec. 25,			Dec. 26,
	2021			2021			2020			2021			2020
	Q3'22			Q2'22			Q3'21			Q3'22			Q3'21
Audio	$	341,897		$	300,775		$	381,885		$	860,027		$	868,239
High-Performance Mixed-Signal		206,452			165,111			103,910			431,461			207,454
Net sales		548,349			465,886			485,795			1,291,488			1,075,693
Cost of sales		258,827			230,442			234,295			626,576			516,511
Gross profit		289,522			235,444			251,500			664,912			559,182
Gross margin		52.8	%		50.5	%		51.8	%		51.5	%		52.0	%

Research and development		107,101			102,116			89,435			294,913			252,986
Selling, general and administrative		38,247			38,132			32,415			111,526			93,366
Restructuring costs		-			-			-			-			352
Total operating expenses		145,348			140,248			121,850			406,439			346,704

Income from operations		144,174			95,196			129,650			258,473			212,478
Interest income (expense)		(78	)		35			1,206			718			4,160
Other income (expense)		(87	)		1,859			(207	)		1,530			688
Income before income taxes		144,009			97,090			130,649			260,721			217,326
Provision for income taxes		16,373			11,994			16,281			30,780			25,263
Net income	$	127,636		$	85,096		$	114,368		$	229,941		$	192,063

Basic earnings per share:	$	2.23		$	1.48		$	1.97		$	4.01		$	3.30
Diluted earnings per share:	$	2.16		$	1.43		$	1.91		$	3.88		$	3.20

Weighted average number of shares:
Basic		57,178			57,364			58,024			57,374			58,176
Diluted		59,031			59,451			59,963			59,317			60,101

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION (unaudited, in thousands, except per share data) (not prepared in accordance with GAAP) Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

	Three Months Ended									Nine Months Ended

	Dec. 25,			Sep. 25,			Dec. 26,			Dec. 25,			Dec. 26,
	2021			2021			2020			2021			2020
Net Income Reconciliation	Q3'22			Q2'22			Q3'21			Q3'22			Q3'21
GAAP Net Income	$	127,636		$	85,096		$	114,368		$	229,941		$	192,063
Amortization of acquisition intangibles		9,083			7,054			2,998			19,135			8,994
Stock-based compensation expense		17,833			16,551			13,287			49,368			42,069
Restructuring costs		-			-			-			-			352
Acquisition-related costs		3,155			5,834			-			8,989			-
Adjustment to income taxes		(7,903	)		(6,045	)		(2,897	)		(16,897	)		(8,172	)
Non-GAAP Net Income	$	149,804		$	108,490		$	127,756		$	290,536		$	235,306

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	2.16		$	1.43		$	1.91		$	3.88		$	3.20
Effect of Amortization of acquisition intangibles		0.16			0.12			0.05			0.32			0.15
Effect of Stock-based compensation expense		0.30			0.28			0.22			0.83			0.70
Effect of Restructuring costs		-			-			-			-			0.01
Effect of Acquisition-related costs		0.05			0.09			-			0.15			-
Effect of Adjustment to income taxes		(0.13	)		(0.10	)		(0.05	)		(0.28	)		(0.14	)
Non-GAAP Diluted earnings per share	$	2.54		$	1.82		$	2.13		$	4.90		$	3.92

Operating Income Reconciliation
GAAP Operating Income	$	144,174		$	95,196		$	129,650		$	258,473		$	212,478
GAAP Operating Profit		26.3	%		20.4	%		26.7	%		20.0	%		19.8	%
Amortization of acquisition intangibles		9,083			7,054			2,998			19,135			8,994
Stock-based compensation expense - COGS		245			272			236			763			640
Stock-based compensation expense - R&D		12,260			10,496			9,526			32,368			27,414
Stock-based compensation expense - SG&A		5,328			5,783			3,525			16,237			14,015
Restructuring costs		-			-			-			-			352
Acquisition-related costs		3,155			5,834			-			8,989			-
Non-GAAP Operating Income	$	174,245		$	124,635		$	145,935		$	335,965		$	263,893
Non-GAAP Operating Profit		31.8	%		26.8	%		30.0	%		26.0	%		24.5	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	145,348		$	140,248		$	121,850		$	406,439		$	346,704
Amortization of acquisition intangibles		(9,083	)		(7,054	)		(2,998	)		(19,135	)		(8,994	)
Stock-based compensation expense - R&D		(12,260	)		(10,496	)		(9,526	)		(32,368	)		(27,414	)
Stock-based compensation expense - SG&A		(5,328	)		(5,783	)		(3,525	)		(16,237	)		(14,015	)
Restructuring costs		-			-			-			-			(352	)
Acquisition-related costs		(3,155	)		(2,373	)		-			(5,528	)		-
Non-GAAP Operating Expenses	$	115,522		$	114,542		$	105,801		$	333,171		$	295,929

Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	289,522		$	235,444		$	251,500		$	664,912		$	559,182
GAAP Gross Margin		52.8	%		50.5	%		51.8	%		51.5	%		52.0	%
Acquisition-related costs		-			3,461			-			3,461			-
Stock-based compensation expense - COGS		245			272			236			763			640
Non-GAAP Gross Profit	$	289,767		$	239,177		$	251,736		$	669,136		$	559,822
Non-GAAP Gross Margin		52.8	%		51.3	%		51.8	%		51.8	%		52.0	%

Effective Tax Rate Reconciliation
GAAP Tax Expense	$	16,373		$	11,994		$	16,281		$	30,780		$	25,263
GAAP Effective Tax Rate		11.4	%		12.4	%		12.5	%		11.8	%		11.6	%
Adjustments to income taxes		7,903			6,045			2,897			16,897			8,172
Non-GAAP Tax Expense	$	24,276		$	18,039		$	19,178		$	47,677		$	33,435
Non-GAAP Effective Tax Rate		13.9	%		14.3	%		13.1	%		14.1	%		12.4	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.28		$	0.20		$	0.27		$	0.52		$	0.42
Adjustments to income taxes		0.13			0.10			0.05			0.28			0.14
Non-GAAP Tax Expense	$	0.41		$	0.30		$	0.32		$	0.80		$	0.56

CONSOLIDATED CONDENSED BALANCE SHEET
unaudited; in thousands

	Dec. 25,			Mar. 27,			Dec. 26,
	2021			2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	195,121		$	442,164		$	327,294
Marketable securities		3,719			55,697			43,289
Accounts receivable, net		326,131			108,712			244,803
Inventories		148,525			173,263			142,689
Other current assets		90,025			62,683			45,469
Total current Assets		763,521			842,519			803,544

Long-term marketable securities		72,118			312,759			326,491
Right-of-use lease assets		173,054			133,548			135,719
Property and equipment, net		157,186			154,942			154,312
Intangibles, net		165,581			22,031			24,322
Goodwill		437,783			287,518			287,518
Deferred tax asset		7,203			9,977			7,277
Long-term prepaid wafers		195,000			-			-
Other assets		96,671			67,320			86,446
Total assets	$	2,068,117		$	1,830,614		$	1,825,629

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	110,250		$	102,744		$	90,814
Accrued salaries and benefits		43,044			54,849			39,367
Lease liability		14,653			14,573			14,539
Acquisition-related liabilities		30,964			-			-
Other accrued liabilities		40,603			41,444			40,135
Total current liabilities		239,514			213,610			184,855

Non-current lease liability		164,896			127,883			129,583
Non-current income taxes		77,683			64,020			70,866
Long-term acquisition-related liabilities		5,528			-			-
Other long-term liabilities		17,749			36,096			39,968

Stockholders' equity:
Capital stock		1,556,746			1,498,819			1,483,567
Accumulated earnings (deficit)		6,416			(112,689	)		(88,238	)
Accumulated other comprehensive income (loss)		(415	)		2,875			5,028
Total stockholders' equity		1,562,747			1,389,005			1,400,357
Total liabilities and stockholders' equity	$	2,068,117		$	1,830,614		$	1,825,629

Prepared in accordance with Generally Accepted Accounting Principles

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