Cirrus Logic: Is the Glory Days Suddenly Over?

The chip manufacturer Cirrus Logic experienced an impressive development on the stock market for most of 2024, resulting in a strong price increase by August. However, recent movements indicate an abrupt end to this rally. Since reaching a 52-week high on August 29, Cirrus' stock price has decreased by almost 30%. Even the latest quarterly results failed to turn the tide. The announcement of the second-quarter results for fiscal year 2025 on November 4 led to a 7% drop in after-hours trading. Cirrus Logic supplies Apple with chips for devices such as iPhones and iPads. This partnership highlights how dependent Cirrus is on the tech giant's sales. Notably, Cirrus' figures were actually positive. Revenue rose 13% year-over-year to $542 million in the second quarter, significantly exceeding the mid-point of the previously communicated revenue forecast of $520 million. Equally impressive is the sequential growth of 45%. This increase was primarily driven by new smartphone launches, for which Cirrus was a crucial supplier. Apple's iPhone sales stagnated in the quarter at $201.1 billion compared to the prior year, while shipment numbers according to IDC rose by 3.5% to 56 million units worldwide, coming close to leading market status. The increase in revenue per device from Cirrus Logic suggests a successful diversification strategy; the company is expanding its product portfolio to include power management modules, camera controllers, and haptic components. This strategy is also reflected in a profit increase of 25% to $2.25 per share. Additionally, the non-GAAP gross margin improved by 90 basis points to 52.2%.