Cirrus Logic's Q1 2026: Navigating Contradictions in Seasonality, PC Diversification, and AI Strategies

Seasonality shift and inventory reduction, PC market diversification, smartphone demand and seasonality, AI opportunities and strategic focus are the key contradictions discussed in Cirrus Logic's latest 2026Q1 earnings call.



Strong Revenue Performance and Smartphone Demand:
- Cirrus Logic reported revenue of $407.3 million for Q1 FY2026, above the top end of their guidance range.
- The growth was driven by strong end demand for smartphones incorporating their silicon.

Gross Margin Shift and Pricing Environment:
- Non-GAAP gross margin was 52.6% in Q1, with a sequential decrease mainly due to a less favorable product mix and a return to a typical pricing environment.
- The year-on-year increase in gross margin was due to a more favorable product mix.

Operating Expenses and Tax Structure:
- Non-GAAP operating expense for Q1 was $119.5 million, with a sequential decrease due to reduced product development costs and lower facilities-related expenses.
- The non-GAAP tax rate for the June quarter was 22.1%, in line with previous guidance.

Inventory Management and GlobalFoundries Commitments:
- Inventory at the end of the first quarter was $279 million, down from $299.1 million from the prior quarter.
- This decrease is primarily attributed to the ongoing management of wafer purchase commitments under their long-term capacity agreement with GlobalFoundries.

Diversification Efforts and Market Expansion:
- Cirrus Logic's progress in expanding beyond their core smartphone market was evident in their partnership with Compal for PC audio enhancement and the design-in of new products into laptops.
- They are also investing in R&D for automotive, professional audio, and industrial applications to broaden their product portfolio and serviceable addressable market.