Cirrus Logic CRUS delivered second-quarter fiscal 2020 non-GAAP earnings per share of $1.55, which topped the Zacks Consensus Estimate of 95 cents as well as the year-ago figure of $1.08.
Total revenues of $389 million also surpassed the Zacks Consensus Estimate of $321 million and improved 6.2% year over and 63% sequentially as well. Robust demand for certain components led to higher revenues, above the upper end of the company’s guidance.
Solid customer engagement across its portfolio has been a tailwind. With customers ramping up shipments ahead of product launches, the company benefited from higher sales of smart codecs and amplifiers in wired and wireless headphones. Apart from the mobile market, rising demand for boosted amplifiers in tablets and laptops is a key driver.
Segment wise, portable audio product revenues (90% of total revenues) came in at $349.4 million, up 7.8% year over year. However, non-portable audio and other products (10%) decreased 6.4% to $39.5 million.
Cirrus Logic’s largest customer, apparently Apple, accounted for 81% of its sales for the reported quarter.
Non-GAAP gross profit was $208.2 million, which increased 12.4% on a year-over-year basis. Gross margin grew 290 basis points (bps) to 53.5%, driven by favorable product mix. Supply chain efficiencies and cost reductions on certain products were also an upside.
Cirrus Logic’s non-GAAP operating expenses slipped 2.6% to $101 million. Non-GAAP operating income of $107.2 million too surged 31.4%. Moreover, non-GAAP operating margin expanded 600 bps from the year-ago quarter to 28%.
Cirrus Logic, Inc. Price, Consensus and EPS Surprise
Cirrus Logic, Inc. price-consensus-eps-surprise-chart | Cirrus Logic, Inc. Quote
Balance Sheet and Cash Flow
The company exited the fiscal second quarter with cash and cash equivalents of $221.9 million compared with $198.1 million at the end of the earlier reported quarter.
Accounts receivables were $207.96 million compared with $111.5 million in the last reported quarter. Notably, the company did not have any long-term debt during the quarter under review.
The company repurchased 559,274 shares worth $30 million in the period. As of Sep 28, 2019, it has $170 million remaining under share repurchase authorization.
The company expects third-quarter fiscal 2020 revenues between $325 million and $365 million.
It projects demand for smart codecs, boosted amplifiers and haptic drivers, ahead of product launches in the second half of the year, to be a consistent tailwind.
Zacks Rank and Stocks to Consider
Cirrus Logic currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Benefitfocus BNFT, Five9, Inc. FIVN and Square SQ, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Benefitfocus, Five9 and Square is currently estimated at 20%, 10% and 25%, respectively.
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