Cirrus Logic: Interim Sprint in the Growth Race Stopped

Cirrus Logic experienced a predominantly positive trajectory in the stock markets in 2024. The ascent was particularly impressive until August, before the share performance stalled in the subsequent months. A closer look reveals that the stock has plummeted nearly 30 percent since its peak on August 29, and despite stable business figures, the downturn could not be avoided. The release of the second quarter results for the fiscal year 2025 on November 4 led to an additional seven percent decline in after-hours trading. Cirrus' revenue in the second quarter was 542 million US dollars, which represents a 13 percent year-over-year increase. Noteworthy is a remarkable sequential revenue jump of 45 percent, significantly surpassing the company's own forecast of 520 million US dollars. This success is primarily attributed to new smartphone launches, especially in collaboration with major customer Apple. Apple, responsible for 90 percent of Cirrus' revenue in the last quarter, utilizes Cirrus for audio and power management chips in the latest iPhones. While Apple recorded a nearly stagnant revenue level of 201.1 billion US dollars in the iPhone segment, the number of iPhones shipped increased by 3.5 percent to 56 million units in the third quarter of 2024. This development highlights Cirrus' potential, as the company generates more revenue per iPhone, partly through diversification into other technology areas such as power management modules and camera controls. Also notable is the increase in earnings per share by 25 percent to 2.25 US dollars, largely supported by an improvement in the GAAP gross margin to 52.2 percent. Cirrus has proven it is more than just a "one-trick pony" in audio needs by cleverly expanding its technical expertise into adjacent product fields.