Cirrus Logic's Q2 2026: Contradictions Emerge on Seasonality Shifts, Diversification, and Power/Battery Progress

Date of Call: November 4, 2025

Financials Results

• Revenue: $561M, up 38% sequential, up 4% YOY
• EPS: $2.83 per diluted share
• Gross Margin: 52.5%, increase YOY due to a more favorable product mix (partially offset by higher inventory reserves)
• Operating Margin: 29.8% of revenue; non-GAAP operating income $167M; OpEx up $8.2M sequential and up $0.9M YOY

Guidance:

• Q3 revenue expected to be $500M to $560M
• Q3 gross margin expected to be 51% to 53%
• Q3 non-GAAP operating expense expected to be $128M to $134M
• Fiscal year non-GAAP effective tax rate expected to be ~16% to 18%
• Inventory expected to decrease slightly quarter-over-quarter in Q3

Business Commentary:

• Record Revenue and Smartphone Demand:
• Cirrus Logic reported record revenue of $561 million for the September quarter, towards the top end of its guidance range.

• The growth was driven by strong demand for components shipping into smartphones.

• Operational Efficiency and OpEx Control:

• Non-GAAP operating expense for the second quarter was $127.7 million, coming in below the low end of the guidance range.

• Lower product development costs and reduced employee-related expenses contributed to the decrease.

• Camera Content and Seasonality Shift:

• The company attributed changes in seasonality to the increased camera content impacting revenue distribution.

• This shift pushed more revenue into the first half of the fiscal year, contrasting with traditional seasonality patterns.

• Battery Management and Power Efficiency:

• Cirrus Logic is focused on opportunities in the battery management and power efficiency areas of smartphone markets.

• The company is leveraging its IP to enhance battery performance and health, with ongoing customer engagement and positive feedback.

• PC Market Expansion and New Products:

• Cirrus Logic is expanding its presence in the PC market, with strong design activity and recent mainstream consumer laptop wins.
• The company is developing new products, like voice-specific features for AI PCs, to further grow its market share and expand its SAM in the PC space.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management reported "record September quarter revenue of $561 million" and highlighted strong demand for new smartphone audio and camera products, expanding traction in PCs (mainstream consumer win), healthy cash ($896M) and robust margins (non-GAAP gross margin 52.5%, operating margin 29.8%), and described visibility into multi-year custom-product revenue streams.

Q&A:

• Question from Tore Svanberg (Stifel, Nicolaus & Company, Incorporated, Research Division): This year has been quite unusual from a seasonality perspective. Any thoughts on seasonality going forward? Could 2026 be back to normal?
  Response: Seasonality has shifted earlier due to a larger share of camera content, but management does not expect further changes to the seasonality for the rest of the fiscal year and is only providing next-quarter guidance.

• Question from Tore Svanberg (Stifel, Nicolaus & Company, Incorporated, Research Division): Any updates on the potential opportunities on the power/battery side in the smartphone market?
  Response: Company continues investing in battery/power IP with multiple programs and customer validation; no concrete design wins or commercialization timing to announce yet.

• Question from David Williams (The Benchmark Company, LLC, Research Division): Q2 OpEx was lower—was that all pushed into Q3 or is there anything else to consider?
  Response: Q2 OpEx underspend was largely timing-related (pushouts), not execution misses; much of the delayed product development spend is expected in Q3, though management remains disciplined and may add spend if high-confidence opportunities arise.

• Question from David Williams (The Benchmark Company, LLC, Research Division): How should we think about revenue trending outside your largest customer, particularly in general markets and computing?
  Response: PC is the primary growth driver outside the largest customer; recent mainstream consumer and commercial laptop wins validate expansion into higher-volume tiers, but ramps are early and Android softness trimmed contribution this quarter.

• Question from Dylan Ollivier (Susquehanna Financial Group, LLLP, Research Division): Any changes to your smartphone unit outlook after the better results this quarter?
  Response: No change to the prior unit outlook—this quarter's strength reflects timing (seasonal shape) rather than an updated full-year smartphone unit forecast.

• Question from Dylan Ollivier (Susquehanna Financial Group, LLLP, Research Division): Do the new AI-PC/voice products expand your SAM, timing for revenue, and customer interest?
  Response: Voice/AI-PC features materially expand the PC SAM with strong OEM interest; SoundWire adoption and multi-platform support broaden opportunities; first product sampling to customers in the December quarter, with revenue to follow after sampling and customer ramp.

Contradiction Point 1

Seasonality and Sales Shift

It involves the explanation of seasonality shifts, which could impact financial projections and revenue expectations.

Can you comment on seasonality and whether 2026 will return to normal? - Tore Svanberg(Stifel, Nicolaus & Company, Incorporated, Research Division)

2026Q2: This change is driven by the growth in camera content and hasn't affected our view of the year's seasonality. We expect the seasonality to revert to historical norms. - Jeffrey Woolard(CFO)

How do volumes, content, and seasonality affect the first half versus the second half of the fiscal year? - David Neil Williams(The Benchmark Company, LLC, Research Division)

2026Q1: Factors contributing to stronger first-half sales include pull-ins, early availability demand, and increased camera content shipments. Despite this shift, full-year expectations remain unchanged. - John M. Forsyth(CEO)

Contradiction Point 2

Diversification and Market Growth

It involves the company's stated progress in diversification, which is crucial for long-term growth and strategic positioning.

How should we assess revenue trends in general markets and computing, excluding your largest customer? - David Williams(The Benchmark Company, LLC, Research Division)

2026Q2: We continue to be excited about opportunities in the power and battery area. We have compelling IP in this space and are working on various projects related to battery efficiency and health. Although we don't have concrete design wins to share yet, we believe our technology has great potential. - John Forsyth(CEO)

What caused the difference between expected and actual results, and what is the status of diversification outside the largest customer? - Christopher Adam Jackson Rolland(Susquehanna Financial Group, LLLP, Research Division)

2026Q1: Diversification is on track, with positive progress in automotive, laptop, and other markets through new product launches and partnerships. - John M. Forsyth(CEO)

Contradiction Point 3

Smartphone Revenue and Unit Outlooks

It involves the revenue and unit outlook for the smartphone market, which is critical for understanding the company's overall growth strategy.

How to assess revenue trends in general markets and computing, excluding your largest customer? - David Williams (The Benchmark Company, LLC, Research Division)

2026Q2: In Q2, which is our May quarter, we experienced some softness in our general market business and a significant pull-in in December led to lower than expected shipments in Q2. Revenue for the quarter was $332 million. - Jeffrey Woolard(CFO)

What was the revenue contribution of your largest customer in fiscal year 2025? Did tariffs cause any production acceleration? - Gary Mobley (Loop Capital)

2025Q4: Our largest customer represented 89% of our fiscal 2025 revenue. We experienced some pull-ins in the December quarter as some customers shifted their production plans in response to anticipated tariffs. - John Forsyth(CEO)

Contradiction Point 4

Seasonality in Business Growth

It involves expectations about the seasonality of business growth, which impacts revenue projections and understanding of market trends.

Can you comment on future seasonality trends? Will 2026 see a return to normal conditions? - Tore Svanberg (Stifel, Nicolaus & Company, Incorporated, Research Division)

2026Q2: Jeff explained that the seasonality of their business has shifted to the first half of the year due to increased camera content and some pull-ins last quarter. - Jeffrey Woolard(CFO)

Are you still expecting a typical seasonal revenue decline in fiscal '26? - Gary Mobley (Loop Capital)

2025Q4: Well, first, we've said that we've had seasonality for 20 years. So we expect that to continue. That's what we've planned for. And so that's a normal and we think a healthy trend for us. - John Forsyth(CEO)

Contradiction Point 5

Power/Battery Opportunities

It highlights differing statements regarding the company's progress and opportunities in the power and battery management space, which impacts product development and strategic focus.

Are there any updates on potential power/battery opportunities in the smartphone market? - Tore Svanberg (Stifel, Nicolaus & Company, Incorporated, Research Division)

2026Q2: John stated that they continue to be excited about opportunities in the power and battery area. They have compelling IP in this space and are working on various projects related to battery efficiency and health. - John Forsyth(CEO)

When might we see products from your battery and power management R&D? - Christopher Rolland (Susquehanna)

2025Q3: We are already shipping power-related products. We are working on innovations for the future, with some IP tested and shown to customers. We are optimistic about our progress. - John Forsyth(CEO)