Why did CRUS's Q3 2025 earnings exceed forecasts significantly?

Cirrus Logic's (CRUS) Q3 2025 earnings exceeded forecasts significantly due to several key factors:

1. **Strong Revenue Performance**: The company reported a revenue of $555.7 million for the quarter, surpassing analyst expectations of $510 million. This indicates a robust demand for Cirrus Logic's products, particularly in the audio component segment.
2. **Gross Margin Expansion**: The company's non-GAAP gross margin expanded by 230 basis points year-over-year to 53.6%. This improvement suggests efficient cost management and a strong market position, which has contributed to the company's profitability.
3. **Demand for Smartphones and Audio Components**: The demand for audio components, especially in smartphones, has been a significant driver for Cirrus Logic's revenue. Despite lower smartphone sales overall, the company benefited from higher shipments of smartphones and increasing demand for audio components.
4. **New Product Contributions**: Cirrus Logic is expanding into new applications such as laptops, gaming, tablets, and AR/VR. While the High-Performance Mixed-Signal segment contributed 38% to the total revenues, the Audio segment remained the major contributor with a 62% share. The company's strategic expansion into new markets is likely to support continued growth and revenue generation.

In summary, Cirrus Logic's Q3 2025 earnings exceeded forecasts due to strong revenue performance, gross margin expansion, demand for audio components in smartphones, and the contribution from new products. These factors combined to deliver a robust financial performance that surpassed market expectations.