CRUS 10-K & 10-Q changes, risk factors and insider trading
Cirrus Logic, Inc. · Nasdaq · Semiconductors & Related Devices · CIK 772406 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“Specifically, our operations and our suppliers’ operations could be harmed, our shipment times could be extended, and our costs could increase if geopolitical conflicts or related government actions disrupt critical trade routes, logistics networks, or the supply of materials our suppliers require to manufacture our products. For example, any deterioration in the social, political, or economic conditions in Taiwan, particularly as it relates to China-Taiwan relations, may disrupt our business operations and materially and adversely affect our results of operations. …”see in full comparison
“Many of our customers and potential customers are placing increased emphasis on geographic diversity and regional resilience in their supply chains, particularly seeking to reduce reliance on manufacturing concentrated in Taiwan and to mitigate broader geopolitical and tariff risks. Customers may also increasingly seek or require certain manufacturing, fabrication, assembly, testing or other supply chain activities to occur within the United States. …”see in full comparison
“Many of our customers and potential customers are placing increased emphasis on geographic diversity and regional resilience in their supply chains, particularly seeking to reduce reliance on manufacturing concentrated in Taiwan and to mitigate broader geopolitical and tariff risks. To achieve geographic diversity, we may need to make increased investments in qualifying geographically diversified manufacturing and test facilities, which could result in additional costs and impact our operating margins. …”see in full comparison
Despite implementing security measures, we are subject to risk, both at Cirrus Logic and through our supply chain, of attack from malicious threat actors, which could include agents of organized crime or nation-state or nation-state supported actors. We manage and store various proprietary information and sensitive or confidential data relating to our business and our employees. In addition, we manage and store a significant amount of proprietary and sensitive or confidential information from third parties, such as our customers and suppliers. Unauthorized insiders and/or third-party threat actors may be able to penetrate our security measures, evade our controls, or exploit vulnerabilities in our systems or our third-party providers' systems and misappropriate or compromise our, our customers' or our suppliers' proprietary and confidential information, including intellectual property and personal information of our current and former employees, create system disruptions, or cause shutdowns. Threat actors also may be able to develop and deploy viruses, worms, phishing attempts, ransomware, and other malicious software that attack our websites, computer systems, access to critical information, products, or otherwise exploit security vulnerabilities. The sophistication, scale and frequency of cyber-attacks has continued to increase and evolve at a rapid pace, and the risk of attack may be heightened when our employees are working remotely. Artificial intelligence and machine learning also may be used for certain cybersecurity attacks, improving or expanding the existing capabilities of threat actors in manners we cannot predict at this time, resulting in greater risks of security incidents and breaches. The risk of state-sponsored or geopolitical-related cybersecurity incidents has also increased due to ongoing geopolitical tensions with Chinasee in full comparisonorandincidents,geopoliticalsuchconflictsasand instability in other regions, including the war inUkraine orUkraine, the Israel-Hamaswar.war, and escalating hostilities involving Iran, Israel and the United States. Such conflicts may increase the risk of retaliatory or opportunistic cyberattacks by nation-state actors, their proxies or other threat actors against us, our customers, our suppliers or other third parties on which we rely. Our prioritization of security measures and remediation of known vulnerabilities may prove inadequate and we may be unable to anticipate or protect against attacks. If an incident occurs, we may be unable to detect it for an extended period of time.
“For example, we rely on several third-party suppliers located in Taiwan. Any deterioration in the social, political, or economic conditions in Taiwan, particularly as it relates to China-Taiwan relations, may disrupt our business operations and materially and adversely affect our results of operations. Similarly, our operations could be harmed, and our costs could increase, if the war in Ukraine results in a shortage of materials that our suppliers require to manufacture our products.”see in full comparison
“For example, conflicts and instability in the Middle East, including tensions involving Iran and potential disruption in and around key regional shipping routes, have adversely affected, and may continue to adversely affect, portions of the global supply chain on which we rely, including by increasing freight and related logistic costs and potentially affecting the timing and reliability of certain aspects of our supply chain. …”see in full comparison
Full comparison: every changed paragraph (25)
Many of our customers and potential customers are placing increased emphasis on geographic diversity and regional resilience in their supply chains, particularly seeking to reduce reliance on manufacturing concentrated in Taiwan and to mitigate broader geopolitical and tariff risks. To achieve geographic diversity, we may need to make increased investments in qualifying geographically diversified manufacturing and test facilities, which could result in additional costs and impact our operating margins. In addition, certain customers have already requested that we hold additional inventory to protect against potential supply disruptions, and such demands may increase over time. These requirements increase our working capital needs, expose us to inventory obsolescence risks, and limit our manufacturing flexibility. If we are unable to meet customer expectations for geographic diversity, inventory management, or supply continuity, we may experience delays in product qualifications, pricing pressure, or loss of business opportunities. Competitors with manufacturing operations in the United States or with a broader geographic manufacturing footprint may be better positioned to meet evolving customer requirements, which could place us at a competitive disadvantage.
We have experienced the effects of industry-wide manufacturing capacity constraints. These supply challenges have impacted, and may continue to impact, our ability to fully satisfy increases in demand for some of our products. Foundries we use have faced increased demand associated with data center build-outs and AI-related applications, which could increase pricing, limit available capacity, result in changes in how available capacity is allocated by our suppliers, and extend lead times. We do not typically manufacture the majority of these products at more than one foundry or more than one assembly and test subcontractor, and the costs and effort associated with the potential transfer of any portion of our supply chain to a backup supplier would likely be substantial. Therefore, if one or more of our third-party manufacturers and suppliers are not able to provide us sufficient capacity to meet our current demand, we may not be able to ship our products to customers on time and in the quantity requested, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships. Capacity constraints could further result in increased prices in our supply chain, which, if we are unable to increase our selling prices or if we have previously committed to pricing, could result in lower revenues and margins that could adversely affect our financial results.
In addition, difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our products. Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturer and us. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate, and resolve manufacturing yield problems. Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships.
Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships.
Our reliance on third-party foundries, assembly and test providers, logistics providers, and other suppliers also exposes us to geopolitical and armed-conflict risks that may disrupt shipping lanes and transportation routes, increase fuel, freight, insurance, security and other logistics costs, and delay the movement of raw materials, wafers, components and finished goods.
For example, conflicts and instability in the Middle East, including tensions involving Iran and potential disruption in and around key regional shipping routes, have adversely affected, and may continue to adversely affect, portions of the global supply chain on which we rely, including by increasing freight and related logistic costs and potentially affecting the timing and reliability of certain aspects of our supply chain. If these or similar events result in increased supply-chain costs and we are unable to offset them through pricing or other measures, or if we have previously committed to pricing, our gross margins, operating results and financial condition could be adversely affected.
Many of our customers and potential customers are placing increased emphasis on geographic diversity and regional resilience in their supply chains, particularly seeking to reduce reliance on manufacturing concentrated in Taiwan and to mitigate broader geopolitical and tariff risks. Customers may also increasingly seek or require certain manufacturing, fabrication, assembly, testing or other supply chain activities to occur within the United States. To achieve geographic diversity, we may need to make increased investments in qualifying geographically diversified manufacturing and test facilities, which could result in additional costs and impact our operating margins. In addition, certain customers have already requested that we hold additional inventory to protect against potential supply disruptions, and such demands may increase over time. These requirements increase our working capital needs, expose us to inventory obsolescence risks, and limit our manufacturing flexibility. If we are unable to meet customer expectations for geographic diversity, U.S.-based supply chain activities, inventory management, or supply continuity, we may experience delays in product qualifications, pricing pressure, or loss of business opportunities. Competitors with manufacturing operations in the United States or with a broader geographic manufacturing footprint may be better positioned to meet evolving customer requirements, which could place us at a competitive disadvantage.
Despite implementing security measures, we are subject to risk, both at Cirrus Logic and through our supply chain, of attack from malicious threat actors, which could include agents of organized crime or nation-state or nation-state supported actors. We manage and store various proprietary information and sensitive or confidential data relating to our business and our employees. In addition, we manage and store a significant amount of proprietary and sensitive or confidential information from third parties, such as our customers and suppliers. Unauthorized insiders and/or third-party threat actors may be able to penetrate our security measures, evade our controls, or exploit vulnerabilities in our systems or our third-party providers' systems and misappropriate or compromise our, our customers' or our suppliers' proprietary and confidential information, including intellectual property and personal information of our current and former employees, create system disruptions, or cause shutdowns. Threat actors also may be able to develop and deploy viruses, worms, phishing attempts, ransomware, and other malicious software that attack our websites, computer systems, access to critical information, products, or otherwise exploit security vulnerabilities. The sophistication, scale and frequency of cyber-attacks has continued to increase and evolve at a rapid pace, and the risk of attack may be heightened when our employees are working remotely. Artificial intelligence and machine learning also may be used for certain cybersecurity attacks, improving or expanding the existing capabilities of threat actors in manners we cannot predict at this time, resulting in greater risks of security incidents and breaches. The risk of state-sponsored or geopolitical-related cybersecurity incidents has also increased due to ongoing geopolitical tensions with China orand incidents,geopolitical suchconflicts asand instability in other regions, including the war in Ukraine orUkraine, the Israel-Hamas war.war, and escalating hostilities involving Iran, Israel and the United States. Such conflicts may increase the risk of retaliatory or opportunistic cyberattacks by nation-state actors, their proxies or other threat actors against us, our customers, our suppliers or other third parties on which we rely. Our prioritization of security measures and remediation of known vulnerabilities may prove inadequate and we may be unable to anticipate or protect against attacks. If an incident occurs, we may be unable to detect it for an extended period of time.
The products we supply our customers are typically a portion of the many components provided from multiple suppliers to complete the final assembly of an end product. If other component suppliers are unable to deliver their required component(s) for the final end product to be assembled, our customers may delay, or ultimately cancel, their orders from us. For example, shipping routes in the Middle East have been and may in the future be disrupted, lengthening the time for shipments to reach their destinations. Additionally, shortages of, or price increases in, certain components, such as memory, may limit our customers’ ability to manufacture their products or increase their costs, which could reduce demand for our components.
Competition for highly qualified personnel in our industry, particularly for employees with technical backgrounds, is intense. Some companies in our industry have adopted flexible remote work arrangements that provide more flexibility than our working arrangements, which may put us at a competitive disadvantage for talent. Accordingly, we expect competition for qualified personnel to continue to be intense because there are a limited number of individuals in the job market with the skills that we and our competitors require.
There also is a risk that changes in immigration laws and regulations, or their administration or enforcement, can impair our ability to attract and retain qualified engineering personnel. In the U.S., where a significant portion of our research and development teams are located, tightening of immigration controls may adversely affect the employment status of non-U.S. engineers and other key technical employees or further impact our ability to hire new non-U.S. employees. Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S. and abroad, additionally limiting the pool of available talent.
Recent and potential changes to U.S. immigration laws, regulations, and administrative practices, including those affecting prevailing wage requirements and the selection or allocation processes for employment-based visa programs (for example, the implementation of a weighted lottery system based on wage levels or increases in prevailing wage levels), may favor higher-compensated positions and increase the compensation and administrative burdens required to sponsor foreign national employees. These changes could adversely affect our ability to hire early-career or entry-level engineers, limit our access to qualified foreign technical talent, increase uncertainty in our ability to secure employment-based visas in the United States, and increase our costs and reduce our flexibility in recruiting and retaining qualified technical talent.
Competition for highly qualified personnel in our industry, particularly for employees with technical backgrounds, is intense. Some companies in our industry have adopted flexible remote work arrangements providing more flexibility than ours that further increase competition for talent. Accordingly, we expect competition for qualified personnel to intensify because there are only a limited number of individuals in the job market with the skills that we require.
There also is a risk that changes in immigration laws and regulations, or their administration or enforcement, can impair our ability to attract and retain qualified engineering personnel. In the U.S., where a significant portion of our research and development teams are located, tightening of immigration controls may adversely affect the employment status of non-U.S. engineers and other key technical employees or further impact our ability to hire new non-U.S. employees. Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S., additionally limiting the pool of available talent.
Specifically, our operations and our suppliers’ operations could be harmed, our shipment times could be extended, and our costs could increase if geopolitical conflicts or related government actions disrupt critical trade routes, logistics networks, or the supply of materials our suppliers require to manufacture our products. For example, any deterioration in the social, political, or economic conditions in Taiwan, particularly as it relates to China-Taiwan relations, may disrupt our business operations and materially and adversely affect our results of operations. Similarly, the war in Ukraine could result in shortages of materials required by our suppliers, and conflicts and instability in the Middle East, including tensions involving Iran and potential disruption in and around key regional shipping routes, have increased, and may continue to increase, freight and related logistics costs and could delay the movement of materials required to manufacture our products.
For example, we rely on several third-party suppliers located in Taiwan. Any deterioration in the social, political, or economic conditions in Taiwan, particularly as it relates to China-Taiwan relations, may disrupt our business operations and materially and adversely affect our results of operations. Similarly, our operations could be harmed, and our costs could increase, if the war in Ukraine results in a shortage of materials that our suppliers require to manufacture our products.
In addition, we are currently working with a supplier that is headquartered in Israel on the development of additional manufacturing alternatives. The declaration of war by Israel against Hamas, the rising tensions in the Middle East, and the resulting actions that may be taken by governments in response to the war could potentially impact or delay the supplier's ability to provide timely engineering support that may be required to advance our efforts to develop future manufacturing alternatives.
Artificial intelligence ("AI") is a rapidly developing field that presents both risks and opportunities. For example, our business operations and research and development tasks may benefit from the use of AI tools. It is possible that we may not leverage this technological change as effectively as our competitors. Additionally, our use of AI may also increase vulnerability to cybersecurity risks, including through unauthorized use or misuse of AI tools and bad inputs or logic or the introduction of malicious code incorporated into AI generated code. While we have implemented security measures and developed internal policies to govern the use of AI, risks exist relating to the protection of data (including the potential exposure of our or our customers’ proprietary and confidential information), the misuse of third-party intellectual property, or our failure to identify and correct deficiencies or inaccuracies generated by AI. Our failure to utilize AI responsibly may impact our reputation and could have a negative impact on our business, operating results, and financial condition.
International sales represented 99 percent, 99 percent, and 97 percent of our net sales in fiscal yearyears 2026, 2025, 2024 and 2023, respectively.2024.
Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period. For discussion of our income taxes, see Note 17 - Income Taxes, of the Notes to Consolidated Financial Statements contained in Part II, Item 8.
The Company’s fiscal year 2017, 2018, and 2019 federal income tax returns are under examination by the IRS. The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies. The final Revenue Agent’s Report asserted additional tax of approximately $168.3 million, excluding interest, and imposing penalties of approximately $63.7 million. We do not agree with the IRS’s positions and we continue to vigorously dispute the proposed adjustments, including through ongoing discussions as part of the administrative process with the IRS Independent Office of Appeals. If an acceptable outcome cannot be reached with IRS Appeals, we are prepared to pursue judicial remedies, which could take a number of years to resolve. Although the final resolution of these matters is uncertain, the Company believes adequate amounts have been reserved for any adjustments to the provision for income taxes that may ultimately result. However, the ultimate amount of assessed tax, interest, and penalties, if any, could be material and may have an adverse impact on our financial position, results of operations, and cash flows in future periods.
Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period. For discussion of our income taxes, see Note 17 - Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8.
The Company’s fiscal year 2017, 2018, and 2019 federal income tax returns are under examination by the IRS. The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies. The final Revenue Agent’s Report asserted additional tax of approximately $168.3 million, excluding interest, and imposing penalties of approximately $63.7 million. We do not agree with the IRS’s positions and we are vigorously defending against the proposed adjustments. We are pursuing resolution through the administrative process with the IRS Independent Office of Appeals and, if necessary, through judicial remedies. We expect it could take a number of years to reach resolution on these matters. Although the final resolution of these matters is uncertain, the Company believes adequate amounts have been reserved for any adjustments to the provision for income taxes that may ultimately result. However, if the IRS prevails in these matters, the assessed tax, interest, and penalties, if any, could have an adverse impact on our financial position, results of operations, and cash flows in future periods.
If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises. Recent weakness in the U.S. dollar relative to certain foreign currencies, particularly the British Pound Sterling, has at times contributed to higher operating expenses when translated into U.S. dollars. With the growth of our international business, our foreign currency exposures may grow and under certain circumstances, could harm our business.
Providing public disclosures regarding ESG matters, for example sustainability reporting, hasis becomesubject moreto broadlyevolving expectedexpectations byand requirements from investors, shareholders, existing and potential employees, customers, regulators, and other third parties.stakeholders. Certain organizations currently, and other organizations may in the future, use such disclosures to evaluate companies regarding ESG activities and publish scores or ratings based upon ESG or “sustainability” metrics. Potential and current investors may use the Company’s ESG ratings to guide their investment strategies and may decrease or withdraw investment, or alternatively increase investment in our competitors, if our ESG performance is perceived to be lagging. The qualitative and quantitative criteria regarding ESG mayare continue to evolveevolving, and we may need to modify our practices and/or incur additional or unexpected costs to satisfy these expectations. We may communicate certain goals or initiatives regarding our ESG activities from time to time, including goals relating to our carbon footprint, and if we are unable to meet those goals or they are perceived to be inadequate, we could be exposed to reputational damage and other emerging areas of risk.
Management's Discussion & Analysis (MD&A)
Largest changes
“In smartphones, we experienced robust demand for our latest custom boosted amplifier and 22-nanometer smart codec, both of which deliver meaningful system-level improvements and exceptional audio performance. The Company advanced our HPMS strategy by beginning the development of next-generation camera controller components and technologies. We also made excellent progress in advanced battery and power applications, where we validated multiple new technologies and intellectual property in silicon. …”see in full comparison
“We recently joined our largest customer’s American Manufacturing Program and are working with both our customer and GlobalFoundries to develop new process technologies for our products, including our efforts to manufacture for the first time at the Malta, New York facility. Participation in this program was one of several important steps we took over the past year to advance both process and geographic diversification across our supply chain. …”see in full comparison
“In fiscal year 2024, the Company recorded $2.0 million in net costs primarily related to a workforce reduction action taken in the second quarter of fiscal year 2024.”see in full comparison
Overall, gross margin for fiscal yearsee in full comparison20252026 was52.552.8 percent. The increase in gross margin for fiscal year20252026 reflects a more favorable product mix.This was partially offset by unfavorable inventory reserve expense and higher supply chain costs.The Company’s number of employees increased from1,625 as of March 30, 2024 to1,660 as of March 29,2025.2025 to 1,668 as of March 28, 2026. The Company achieved net income of$331.5$414.4 million in fiscal year2025,2026, which included an income tax provision in the amount of$113.4$82.3 million.
Overall gross margin ofsee in full comparison52.552.8 percent for fiscal year20252026 increased from fiscal year20242025 gross margin of51.252.5 percent. The increase reflects a more favorable product mix.This was partially offset by unfavorable inventory reserve expense and higher supply chain costs, compared to fiscal year 2024.Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year2025.2026.
“We recorded income tax expense of $82.3 million in fiscal year 2026 on pre-tax income of $496.7 million, yielding an effective tax rate of 16.6 percent. Our effective tax rate in fiscal year 2026 was lower than the U.S. statutory rate of 21.0 percent, primarily due to the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate. …”see in full comparison
Full comparison: every changed paragraph (27)
Cirrus Logic develops low-power, high-precision mixed-signal processing solutions for a broad range of customers. We track operating results in one reportable segment, but report revenue performance by product line: Audio and HPMS products. In fiscal year 2025,2026, the Company madecontinued goodto progress executingexecute on strategicour initiatives.three-pronged Instrategy to grow Cirrus Logic by maintaining our flagshipleadership in smartphone audioaudio, businessincreasing wehigh-performance beganmixed-signal shipping the latest-generation of our boosted amplifier and first 22-nanometer smart codec. We also expanded our (HPMS) content in smartphonessmartphones, asand we benefited from increased unit shipments ofleveraging our camera controllersaudio and broadenedHPMS ourexpertise footprintand withintellectual ourproperty generalto marketexpand hapticinto components.additional applications and markets.
In smartphones, we experienced robust demand for our latest custom boosted amplifier and 22-nanometer smart codec, both of which deliver meaningful system-level improvements and exceptional audio performance. The Company advanced our HPMS strategy by beginning the development of next-generation camera controller components and technologies. We also made excellent progress in advanced battery and power applications, where we validated multiple new technologies and intellectual property in silicon. Our achievements were underscored by a recent announcement from our largest customer that highlights our collaboration on a solution to support their FaceID implementation in future products. We are designing our first product in this area, a smart power IC, which represents an exciting new application space for Cirrus Logic.
Beyond smartphones, we made considerable progress in fiscal year 2026 implementing our strategy to expand into new applications and markets. We achieved strong year-over-year revenue growth in PCs as we gained share across all PC segments. The introduction of new amplifiers and codecs that target a wider range of platforms and AI-enabled PCs has positioned the Company well for continued growth in fiscal year 2027. And in our general market business, we developed multiple new product families that broaden our presence in the professional audio, automotive, industrial, and imaging end markets.
We recently joined our largest customer’s American Manufacturing Program and are working with both our customer and GlobalFoundries to develop new process technologies for our products, including our efforts to manufacture for the first time at the Malta, New York facility. Participation in this program was one of several important steps we took over the past year to advance both process and geographic diversification across our supply chain. Additionally, given the considerable range of opportunities across our custom silicon and general market businesses, we expect R&D investments to grow in fiscal year 2027, primarily due to planned headcount growth and product development expenses.
Additionally, we made considerable progress leveraging our investments in Audio and HPMS into new applications and markets. Our achievements in the laptop market, which is our most immediate growth opportunity, included securing our first high-volume mainstream design win with our latest PC codec, increasing our direct engagement with PC OEMs, and further expanding our presence in leading reference designs. During fiscal year 2025, we also made advancements with our general market business where we have been selectively developing new components that offer sustained differentiation.
Fiscal year 20252026 net sales of $1.90$2.00 billion represented an increase over fiscal year 20242025 net sales of $1.79$1.90 billion. Audio product line sales of $1.14$1.16 billion in fiscal year 20252026 increased 52 percent from fiscal year 20242025 sales of $1.08$1.14 billion. The most significant drivers of the increase were salesdemand associatedfor withcomponents ourshipping latest-generationinto productssmartphones, andas well as higher smartphonePC volumes, partially offset by weakness in general market salessales, versus the prior fiscal year. HPMS product line sales of $758.9$837.4 million represented ana 810 percent increase from fiscal year 20242025 sales of $705.0$758.9 million, largely attributable to higherdemand contentfor incomponents smartphonesshipping andinto sales associated with latest-generation products, partially offset by lower general market sales.smartphones.
Overall, gross margin for fiscal year 20252026 was 52.552.8 percent. The increase in gross margin for fiscal year 20252026 reflects a more favorable product mix. This was partially offset by unfavorable inventory reserve expense and higher supply chain costs. The Company’s number of employees increased from 1,625 as of March 30, 2024 to 1,660 as of March 29, 2025.2025 to 1,668 as of March 28, 2026. The Company achieved net income of $331.5$414.4 million in fiscal year 2025,2026, which included an income tax provision in the amount of $113.4$82.3 million.
A discussion regarding our financial condition and results of operations for fiscal year 20252026 compared to fiscal year 20242025 is presented below. A discussion regarding our financial condition and results of operations for fiscal year 2025, compared to fiscal year 2024, which was a 53-week fiscal year, compared to fiscal year 2023 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended March 30,29, 2024,2025, filed with the SEC on May 24,23, 2024.2025.
Net sales for fiscal year 20252026 increased by 65 percent, to $1.90$2.0 billion from $1.79$1.9 billion in fiscal year 2024.2025. Audio product sales increased $53.2$22.8 million, or 52 percent in fiscal year 2025.2026. The most significant drivers of the increase were salesdemand associatedfor withcomponents ourshipping latest-generationinto productssmartphones, andas well as higher smartphonePC volumes, offset by weakness in general market salessales, versus the prior fiscal year. The increase in net sales also reflects a $54.0$78.5 million increase in HPMS product sales, or 810 percent, from fiscal year 20242025 sales of $705.0$758.9 million, primarily due to higherdemand contentfor incomponents smartphonesshipping andinto sales associated with latest-generation products, partially offset by lower general market sales.smartphones.
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately $2.0 billion, $1.9 billion in 2025billion, and $1.8 billion in each of fiscal years 20242026, 2025, and 2023,2024, respectively, representing 99 percent, 99 percent, and 97 percent of net sales in fiscal yearyears 2026, 2025, 2024, and 2023, respectively.2024. Our sales are denominated primarily in U.S. dollars.
Overall gross margin of 52.552.8 percent for fiscal year 20252026 increased from fiscal year 20242025 gross margin of 51.252.5 percent. The increase reflects a more favorable product mix. This was partially offset by unfavorable inventory reserve expense and higher supply chain costs, compared to fiscal year 2024. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2025.2026.
Fiscal year 2026 research and development expenses of $434.0 million reflect a decrease of $0.7 million from fiscal year 2025. The decrease was attributable to decreased stock-based compensation and product development costs, largely due to the timing of new products, partially offset by increased employee-related costs.
Fiscal year 2025 research and development expenses of $434.7 million reflect an increase of $8.2 million, or 2 percent, from fiscal year 2024. The increase was attributable to increased employee-related, variable compensation, and facilities-related costs, offset by decreased stock-based compensation, and acquisition-related costs, in addition to increased R&D incentives versus fiscal year 2024. See Note 2 - Summary of Significant Accounting Policies - Government Assistance of the Notes to Consolidated Financial Statements in Item 8 for additional details relating to R&D incentives.
Fiscal year 20252026 selling, general and administrative expenses of $151.0$159.8 million reflect an increase of $6.8$8.8 million, or 56 percent, compared to fiscal year 2024.2025. The increase was primarily attributable to increased employee-relatedstock-based compensation and variableemployee-related compensation costs in fiscal year 2025.expenses.
Restructuring
In fiscal year 2024, the Company recorded $2.0 million in net costs primarily related to a workforce reduction action taken in the second quarter of fiscal year 2024.
Interest income in fiscal years 20252026 and 20242025 was $34.0$37.7 million and $21.5$34.0 million, respectively. The increase in interest income in fiscal year 20252026 versus prior year was adue functionto ofreturns highergenerated yields onfrom higher combined average cash, cash equivalent,equivalents, and marketable securities balances throughout the year.
In fiscal years 20252026 and 2024,2025, the Company reported $1.5$(0.5) million and $(0.1)$1.5 million, respectively, in other income (expense), related to remeasurement on foreign currency denominated monetary assets and liabilities and other non-operating income and expenses.
We recorded income tax expense of $82.3 million in fiscal year 2026 on pre-tax income of $496.7 million, yielding an effective tax rate of 16.6 percent. Our effective tax rate in fiscal year 2026 was lower than the U.S. statutory rate of 21.0 percent, primarily due to the effect of income earned in certain foreign jurisdictions that is taxed below the federal statutory rate. The fiscal year 2026 effective tax rate was also favorably impacted by the One Big Beautiful Bill Act ("OBBBA"), enacted on July 4, 2025, which included a broad range of tax reform provisions and extended or modified many provisions first enacted in the Tax Cuts and Jobs Act ("TCJA") in 2017. Beginning with fiscal year 2026, the OBBBA permanently eliminated the TCJA's requirement to capitalize U.S. research and development ("R&D") expenditures. A number of other provisions, including modifications to existing international tax provisions, will take effect in fiscal year 2027.
We recorded income tax expense of $113.4 million in fiscal year 2025 on pre-tax income of $444.9 million, yielding an effective tax rate of 25.5 percent. We recorded income tax expense of $89.4 million in fiscal year 2024 on pre-tax income of $363.9 million, yielding an effective tax rate of 24.6 percent.
We recorded income tax expense of $113.4 million in fiscal year 2025 on pre-tax income of $444.9 million, yielding an effective tax rate of 25.5 percent. Our effective tax ratesrate in fiscal yearsyear 2025 and 2024 werewas higher than the U.S. statutory rate of 21.0 percent, primarily due to U.S. tax paid on our foreign earnings resulting from an increase in global intangible low-taxed income ("GILTI"), which is treated as a period cost, anddue ato reductionthe in foreign tax credits. GILTI is unfavorably impacted by aTCJA provision in the Tax Cuts and Jobs Act of 2017 that requiresrequired research and development expenditures incurredto startingbe capitalized in fiscal year 2023 to be capitalized2025 and amortized ratably over five or fifteen years depending on the location in which the research activities arewere conducted. In addition, U.S. tax rules introduced in fiscal year 2023 related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, reduce the amount of foreign tax credits available to offset GILTI.
The Organization for Economic Cooperation and Development has announced an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two Model Rules for a global minimum tax that call for the taxation of large multinational corporations at a minimum rate of 15%. Certain jurisdictions in which we operate, including the United Kingdom, have enacted Pillar Two legislation. There was no material impact on our consolidated financial statements in fiscal year 2025.
In fiscal year 2026, cash flow from operations was $650.6 million. Operating cash flow during fiscal year 2026 was related to the cash components of our net income and a $103.4 million favorable change in working capital. The favorable change in working capital was driven primarily by decreases in inventory and prepaid wafer balances (related to the Capacity Reservation Agreement) and increases in accounts payable, partially offset by decreases in other accrued liabilities and income taxes payable. In fiscal year 2025, cash flow from operations was $444.4 million. Operating cash flow during fiscal year 2025 was related to the cash components of our net income and a $23.4 million unfavorable change in working capital, primarily driven by increases in inventory and accounts receivable, partially offset by prepaid wafer balances (related to the Capacity Reservation Agreement).
In fiscal year 2025, cash flow from operations was $444.4 million. Operating cash flow during fiscal year 2025 was related to the cash components of our net income and a $23.4 million unfavorable change in working capital. The unfavorable change in working capital was driven primarily by increases in inventory and accounts receivable, partially offset by prepaid wafer usage (related to the Capacity Reservation Agreement). In fiscal year 2024, cash flow from operations was $421.7 million. Operating cash flow during fiscal year 2024 was related to the cash components of our net income and an $18.4 million favorable change in working capital, primarily driven by prepaid wafer usage (related to the Capacity Reservation Agreement), decreases in other assets and increased income taxes payable, partially offset by decreased accounts payable and acquisition-related liabilities, as well as increases in accounts receivable.
In fiscal year 2026, the Company used $75.1 million in cash for investing activities primarily related to $60.3 million in net purchases of marketable securities and capital expenditures and technology investments of $14.8 million. In fiscal year 2025, the Company used $124.3 million in cash for investing activities primarily related to $95.5 million in net purchases of marketable securities and capital expenditures and technology investments of $28.8 million.
In fiscal year 2025, the Company used $124.3 million in cash for investing activities primarily related to $95.5 million in net purchases of marketable securities and capital expenditures and technology investments of $28.8 million. In fiscal year 2024, the Company used $163.0 million in cash for investing activities primarily related to $124.7 million in net purchases of marketable securities and capital expenditures and technology investments of $38.3 million.
On July 8, 2021, the Company entered into a second amended and restated credit agreement (the “"Second Amended Credit Agreement”") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Second Amended Credit Agreement provides for a $300 million senior secured revolving credit facility (the “"Revolving Credit Facility”"). The Revolving Credit Facility matureswould have matured on July 8, 20262026, (prior to the “MaturityThird Date”).Amended Credit Agreement described in Note 8 - Revolving Credit Facility. The Revolving Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the "Subsidiary Guarantors"). The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.
What changed in the latest 10-Q
Risk Factors
New heading “We have long-term capacity reservation and wafer supply agreements with GlobalFoundries, which include obligations to purchase wafers from GlobalFoundries through calendar year 2028. If our requirements are different from the number of wafers that we have committed to purchase from GlobalFoundries, or if GlobalFoundries is not able to satisfy our manufacturing requirements, our results of operations and financial condition could be adversely impacted.”
New heading “Our debt obligations may be a burden on our future cash flows and cash resources.”
New heading “Our Third Amended Credit Agreement contains restrictions that could limit our flexibility in operating our business.”
Removed heading “If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business.”
Largest changes
“A breach of any of these covenants could result in a default under the Third Amended Credit Agreement. In the event of a default, the lenders could elect to declare all amounts then outstanding to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we may not be able to repay our debt obligations. If we were unable to repay amounts due to the lenders under our credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness.”see in full comparison
“On May 4, 2026, the Company entered into a third amended and restated credit agreement (the “Third Amended Credit Agreement”) which provides for a $350 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on May 4, 2031 (the “Maturity Date”). As of June 27, 2026, the Company did not have an outstanding balance under the Revolving Credit Facility. …”see in full comparison
“We have long-term capacity reservation and wafer supply agreements with GlobalFoundries, which include obligations to purchase wafers from GlobalFoundries through calendar year 2028. If our requirements are different from the number of wafers that we have committed to purchase from GlobalFoundries, or if GlobalFoundries is not able to satisfy our manufacturing requirements, our results of operations and financial condition could be adversely impacted.”see in full comparison
“Even with long-term supply agreements, we are still subject to risks that GlobalFoundries will be unable to meet its supply commitments, achieve anticipated manufacturing yields, manufacture our products on a timely basis, or provide additional wafer capacity beyond its current contractual commitments sufficient to meet our customers' product demands. …”see in full comparison
“If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business.”see in full comparison
“Our Third Amended Credit Agreement contains restrictions that could limit our flexibility in operating our business.”see in full comparison
Full comparison: every changed paragraph (25)
While we generate sales from a broad base of customers worldwide, the loss of any of our key customers, or a significant reduction in sales or selling prices to any key customer, or reductions in selling prices made to retain key customer relationships, would significantly reduce our revenue, margins and earnings and adversely affect our business. For the thirdfirst quarter of fiscal years 20262027 and 2025, our ten largest end customers represented approximately 97 percent and 96 percent of our net sales, respectively. For each of the first nine months of fiscal years of 2026 and 2025,2026, our ten largest end customers represented approximately 96 percent and 95 percent of our net sales.sales, respectively. We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 9490 percent and 9186 percent of the Company’s total net sales for the thirdfirst quarter of fiscal years 20262027 and 2025,2026, respectively, and 90 percent for each of the first nine months of fiscal years of 2026 and 2025.respectively. No other end customer or distributor represented more than 10 percent of net sales for the three or nine months ended DecemberJune 27, 2025,2026, or DecemberJune 28, 2024.2025.
We have long-term capacity reservation and wafer supply agreements with GlobalFoundries, which include obligations to purchase wafers from GlobalFoundries through calendar year 2028. If our requirements are different from the number of wafers that we have committed to purchase from GlobalFoundries, or if GlobalFoundries is not able to satisfy our manufacturing requirements, our results of operations and financial condition could be adversely impacted.
In 2021, in an effort to alleviate some of our future expected supply constraints, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries on July 28, 2021 to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through 2026. In February 2025, this agreement was amended to reflect an agreed change in the number of wafers to be shipped on a quarterly basis during calendar years 2025 and 2026. On June 30, 2026, the Company entered into a new Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries to reserve capacity and set wafer pricing for products pursuant to the agreement for calendar years 2027-2028.
Although we believe these agreements are a good use of our financial resources and secure capacity for certain products through 2028, the agreements with GlobalFoundries involve certain risks that have resulted and may in the future result in excess inventory, or may place us at a competitive disadvantage, have a negative impact on our liquidity, or adversely affect our results of operations and financial condition. Pursuant to the agreements, the Company is required to purchase, and GlobalFoundries is required to supply, a certain number of wafers on a quarterly basis. Customers, on occasion, cancel, reschedule orders, or change future product plans on short notice, which can lead to our actual wafer requirements being less than the number of wafers required to meet the applicable wafer purchase requirements, potentially resulting in excess inventory or higher inventory unit costs, both of which may adversely impact our gross margin and our results of operations.
Additionally, the agreements set forth pricing for wafer purchases pursuant to the agreements through 2028. If market conditions change and wafer prices in the market decrease significantly below what is contemplated in the agreements, the agreements may put us at a competitive disadvantage relative to our competitors.
Even with long-term supply agreements, we are still subject to risks that GlobalFoundries will be unable to meet its supply commitments, achieve anticipated manufacturing yields, manufacture our products on a timely basis, or provide additional wafer capacity beyond its current contractual commitments sufficient to meet our customers' product demands. If this were to occur, we may experience delays in product launches or supply shortages for certain products, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships. In addition, if GlobalFoundries experiences financial difficulties or goes into bankruptcy, it could be difficult or impossible, or may require substantial time and expense, for us to recover any or all of our prepayments made as part of the agreements.
Any of the foregoing could materially harm our liquidity, financial condition and results of operations and could put us at a disadvantage relative to our competitors.
If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business.
Competition for highly qualified personnel in our industry, particularly for employees with technical backgrounds, is intense. Some companies in our industry have adopted flexible remote work arrangements that provide more flexibility than our working arrangements, which may put us at a competitive disadvantage for talent. Accordingly, we expect competition for qualified personnel to continue to be intense because there are a limited number of individuals in the job market with the skills that we and our competitors require.
There also is a risk that changes in immigration laws and regulations, or their administration or enforcement, can impair our ability to attract and retain qualified engineering personnel. In the U.S., where a significant portion of our research and development teams are located, tightening of immigration controls may adversely affect the employment status of non-U.S. engineers and other key technical employees or further impact our ability to hire new non-U.S. employees. Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S. and abroad, additionally limiting the pool of available talent.
In December, the Department of Homeland Security finalized regulations amending the H-1B registration and selection process to implement a weighted lottery system based on wage levels. Under the finalized rules, registrations for positions offering higher wages receive proportionally greater chances of selection, while positions with lower wage levels receive fewer entries. This weighting system favors higher-paid positions and may adversely affect employers, like us, that seek to hire early-career or entry-level engineers who typically qualify at lower wage levels. As a result, the rules may further limit our access to qualified foreign technical talent and increase uncertainty in our ability to secure H-1B employees in the United States.
There are significant costs to the Company associated with attracting and retaining qualified personnel in key technology positions. Recruiting and employee costs, such as cash and stock-based compensation, have increased relative to historic levels and may continue to increase, which could adversely affect our results of operations. Further, the loss of the services of key personnel or our inability to hire new personnel with the requisite skills or to assimilate talent could restrict our ability to develop new products or timely enhance existing products, sell products to our customers, or manage our business effectively.
We are subject to taxes in the U.S. and numerous foreign jurisdictions, including the United Kingdom (“U.K.”), where a number of our subsidiaries are organized. Due to economic and political conditions, tax laws in various jurisdictions may be subject to significant change. For example, many countries have started to implement legislation and other guidance to align their international tax rules with the Organization of Economic Cooperation and Development’s Base Erosion and Profit Shifting recommendations and action plan that aim to standardize and modernize global corporate tax policy, including implementation of a global minimum tax (“Pillar Two”). In another example, the U.K. government has proposed legislation relating to the treatment of foreign permanent establishments for U.K. tax purposes. If enacted, interpreted or applied in a manner adverse to our structure or operations, such changes could alter the treatment of income, expenses, tax attributes or incentives associated with U.K. foreign branch operations, including by reducing the availability or value of the U.K. research and expenditure credit or other tax benefits, and could adversely affect our provision for income taxes, effective tax rate, operating results, cash flows and financial condition. These and other changes in tax laws and regulations may impact both our international and domestic tax liabilities and result in increased complexity and uncertainty and may adversely affect our provision for income taxes. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. If our effective tax rates were to increase, particularly in the U.S. or the U.K., or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.
Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period. For discussion of our income taxes, see Note 10 - Income Taxes, of the Notes to Consolidated Condensed Financial Statements contained in Part I, Item 1.
Our debt obligations may be a burden on our future cash flows and cash resources.
On May 4, 2026, the Company entered into a third amended and restated credit agreement (the “Third Amended Credit Agreement”) which provides for a $350 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on May 4, 2031 (the “Maturity Date”). As of June 27, 2026, the Company did not have an outstanding balance under the Revolving Credit Facility. To the extent the Company has an outstanding balance, our ability to repay the principal of, to pay interest on, or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive, regulatory, and other factors, some of which are beyond our control. Our business may not generate cash flow from operations in the future sufficient to satisfy our obligations or to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, or refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Third Amended Credit Agreement.
Our Third Amended Credit Agreement contains restrictions that could limit our flexibility in operating our business.
Our Third Amended Credit Agreement contains various covenants that could limit our ability to engage in specified types of transactions under certain conditions. These covenants could limit our ability to, among other things:
- pay dividends on, repurchase, or make distributions in respect of our capital stock or make other restricted payments;
- incur additional indebtedness or issue certain preferred shares;
- make certain investments;
- sell certain assets;
- create liens;
- consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; and - enter into certain transactions with our affiliates.
A breach of any of these covenants could result in a default under the Third Amended Credit Agreement. In the event of a default, the lenders could elect to declare all amounts then outstanding to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we may not be able to repay our debt obligations. If we were unable to repay amounts due to the lenders under our credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness.
Management's Discussion & Analysis (MD&A)
Largest changes
Selling, general and administrative expense for the firstsee in full comparisonnine monthsquarter of fiscal year20262027 was$120.0$42.4 million, an increase of$6.4$3.7 million, from$113.6$38.7 millionforin the firstnine monthsquarter of fiscal year2025,2026, due primarilydueto increasedstock-basedemployee-relatedcompensation,costs and professionalservices,feesemployee-related expenses, and software maintenance contract costs. The increase was partially offset byfor theabsence of non-recurring lease impairment costs incurred in the prior comparable period.quarter.
“Finally, we recently signed a new Capacity Reservation and Wafer Supply Agreement with GlobalFoundries. This agreement builds on our existing partnership and secures dedicated wafer capacity and pricing for calendar 2027 and 2028, further supporting the broad range of opportunities we see ahead. We are also continuing to collaborate with GlobalFoundries on next-generation process technologies and progressing towards manufacturing products in the United States at their facility in Malta, New York.”see in full comparison
“On March 20, 2023, the Company, entered into the First Amendment (the “Amendment”) to its Second Amended Credit Agreement, with the lending institutions party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment updates the benchmark interest rate provisions to replace LIBOR with Term SOFR, for the purposes of calculating interest under the terms of the Second Amended Credit Agreement.”see in full comparison
Gross margin wassee in full comparison52.752.6 percent in the first quarter of fiscal years 2027 and 2026, remaining flat for thefirstperiod,nine months of fiscal year 2026, up from 52.3 percent for the first nine months of fiscal year 2025, primarily due toas amorefavorable productmix.mixAdditionally,wasASP reductions due to previously anticipated pricing reductions were mostlypartially offset byreducedhigherproductfreight and supply chain costs.
The Company reported interest income ofsee in full comparison$9.5$10.4 million and$27.3$8.8 million for the threeand ninemonths endedDecemberJune 27,2025, respectively,2026, and$8.4 million and $25.2 million for the three and nine months ended DecemberJune 28,2024,2025, respectively. Interest income increased in the current period due toreturns generated fromhighercombinedaverage cash, cash equivalents and marketable securities balances, partially offset by marginally lower interest rates compared to the prior period.
Cash generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations wassee in full comparison$499.2$64.1 million for the firstninethree months of fiscal year20262027 versus$314.0$116.1 million generated for the corresponding period of fiscal year2025.2026. The cash flow from operations during the firstninethree months of fiscal year20262027 was related to the cash components of our net income and a$55.8 million favorable change in working capital, primarily as a result of decreases in inventory and prepaid wafer balances (related to the Capacity Reservation Agreement), partially offset by increases in accounts receivables, and decreases in taxes payable. The cash flow from operations during the corresponding period of fiscal year 2025 was related to the cash components of our net income and a $57.4$42.0 million unfavorable change in working capital, primarily as a result of increases in accounts receivables and inventory, and decreases in accounts payable and other accrued liabilities, partially offset bydecreasesincreases in prepaid waferbalancesusage (related to the Capacity Reservation Agreement),. The cash flow from operations during the corresponding period of fiscal year 2026 was related to the cash components of our net income and a $27.4 million favorable change in working capital, primarily as a result of decreases in inventory, increases in prepaid wafer usage (related to the Capacity Reservation Agreement) and income taxes payable,andpartially offset by decreases in accounts payable and other accrued liabilities.
Full comparison: every changed paragraph (35)
This Quarterly Report on Form 10-Q including Management’s Discussion and Analysis of Financial Condition and Results of Operations and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on expectations, estimates, forecasts and projections and the beliefs and assumptions of our management as of the filing of this Form 10-Q. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimates,” “intend,” and variations of these types of words and similar expressions which are intended to identify these forward-looking statements. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and readers should not place undue reliance on such statements. We undertake no obligation, and expressly disclaim any duty, to revise or update publicly any forward-looking statement for any reason, except as required by law.
During the first quarter of fiscal year 2027, we saw strong demand for our custom products shipping into smartphones. We also made good progress in the development of our next-generation camera controller and new smart power IC for 3D sensing applications. The latter is part of a broader set of power and battery opportunities that we believe will diversify our product portfolio and support long-term growth. Beyond smartphones, the PC market remains our largest near-term growth opportunity. In the current quarter, we were encouraged by our design win activity and customer engagement, which included interest in our latest smart codec for AI-enabled PCs. Additionally, in June multiple customers announced new PCs based on NVIDIA’s RTX Spark™ platform, which are expected to ship later this year with Cirrus Logic amplifiers and codecs.
In our general market business, we also continued to expand across a broad base of customers in the professional audio, automotive, industrial, and imaging markets. Our progress in the first quarter of fiscal year 2027 included taping out a new high-performance analog front-end (AFE) component for metrology applications, which we expect to begin sampling in the September quarter. While this component will initially be used for smart meters, we believe over time the underlying technology can extend into adjacent applications such as data center DC metrology, energy storage, EV charging, and grid monitoring. We remain optimistic about our opportunities to continue leveraging our mixed-signal design and signal processing expertise to drive growth across new applications and markets in future years.
Finally, we recently signed a new Capacity Reservation and Wafer Supply Agreement with GlobalFoundries. This agreement builds on our existing partnership and secures dedicated wafer capacity and pricing for calendar 2027 and 2028, further supporting the broad range of opportunities we see ahead. We are also continuing to collaborate with GlobalFoundries on next-generation process technologies and progressing towards manufacturing products in the United States at their facility in Malta, New York.
The Company remains committed to our three-pronged strategy for growing our business: first, maintaining our leadership position in smartphone audio; second, increasing HPMS content in smartphones; and third, leveraging our strength in audio and HPMS to expand into additional applications and markets with new and existing components. During the third quarter of fiscal year 2026, we continued to execute on these strategic initiatives. Revenue exceeded expectations due to stronger-than-anticipated demand for our components shipping into smartphones, as well as a favorable mix of end devices. In PCs, we advanced our growth strategy by ramping our latest-generation amplifier and codec in mainstream platforms and sampling a new voice interface component for AI-enabled PCs. Multiple leading OEMs introduced PCs incorporating our amplifiers, codecs, and haptic drivers at the Consumer Electronics Show (CES) in early January.
In our general market business, design momentum increased across our portfolio of ADCs, DACs, and ultra-high-performance audio codecs, and we began sampling a new family of audio components aimed at broader markets. Finally, we announced a new family of automotive haptic components, which we view as a meaningful long-term growth opportunity.
There have been no significant changes during the three and nine months ended DecemberJune 27, 2025,2026, to the information provided under the headings “Critical Accounting Estimates” and “Summary of Significant Accounting Policies” included in our fiscal year 20252026 Annual Report on Form 10-K for the fiscal year ended March 29,28, 2025.2026.
The following table summarizes the results of our operations for the three and nine months of fiscal years 20262027 and 2025,2026, respectively, as a percentage of net sales. All percentage amounts were calculated using the underlying data in thousands, unaudited:unaudited. Percentages are rounded to the nearest whole percent and, as a result, may not sum to subtotals presented.
Net sales for the thirdfirst quarter of fiscal year 20262027 increased $24.9$52.5 million, or 413 percent, to $580.6$459.7 million from $555.7$407.3 million in the thirdfirst quarter of fiscal year 2025.2026. Net sales from our audio products decreasedincreased $1.8$9.0 million, primarily driven by lower general markethigher sales andof components shipping in smartphones, partially offset by declines in average sales prices ("ASPs") due to previously anticipated pricing reductions. This decrease was mostly offset by higher smartphones units. Net sales from HPMS products increased $26.7$43.5 million for the quarter versus the thirdfirst quarter of fiscal year 2025,2026, primarily due to higher smartphonesales unitof volumes,components shipping in smartphones, partially offset by declines in ASPs due to previously anticipated pricing reductions.
Net sales for the first nine months of fiscal year 2026 increased $77.2 million, or 5 percent, to $1.55 billion from $1.47 billion for the first nine months of fiscal year 2025. Net sales from our audio products increased $20.9 million, primarily driven by higher smartphone unit volumes and sales associated with latest-generation products, partially offset by declines in ASPs due to previously anticipated pricing reductions and lower general market sales. Net sales from HPMS products increased $56.4 million for the year versus the first nine months of fiscal year 2025, primarily due to higher smartphone unit volumes and, to a lesser extent, increased sales of custom components in non-smartphone applications and higher general market sales. Declines in ASPs due to previously anticipated pricing reductions partially offset the increase.
International sales, including sales to U.S.-based end customers that manufacture products through contract manufacturers or plants located overseas, were approximately 99 percent of net sales for each of the thirdfirst quarters and nine month periods of fiscal years 20262027 and 2025.2026. Our sales are denominated primarily in U.S. dollars.
Since the components we produce are largely proprietary, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may purchase our products directly from us, through distributors, or third-party manufacturers contracted to produce their designs. For the thirdfirst quarters of fiscal years 20262027 and 2025,2026, our ten largest end customers represented approximately 9796 percent and 9695 percent,percent of our net sales, respectively, and 96 percent of our net sales for each of the first nine months of fiscal years 2026 and 2025.respectively.
We had one end customer, Apple Inc., that purchased through multiple contract manufacturers and represented approximately 9490 percent and 9186 percent of the Company’s total net sales for the thirdfirst quarters of fiscal years 20262027 and 2025,2026, respectively, and 90 percent for each of the first nine months of fiscal years 2026 and 2025.respectively.
No other end customer or distributor represented more than 10 percent of net sales for the three and nine months ended DecemberJune 27, 20252026 or DecemberJune 28, 2024.2025.
Gross margin was 53.1 percent in the third quarter of fiscal year 2026, down from 53.6 percent in the third quarter of fiscal year 2025, largely driven by ASP reductions due to previously anticipated pricing reductions, which were mostly offset by cost reductions.
Gross margin was 52.752.6 percent in the first quarter of fiscal years 2027 and 2026, remaining flat for the firstperiod, nine months of fiscal year 2026, up from 52.3 percent for the first nine months of fiscal year 2025, primarily due toas a more favorable product mix.mix Additionally,was ASP reductions due to previously anticipated pricing reductions were mostlypartially offset by reducedhigher productfreight and supply chain costs.
Research and development expense for the thirdfirst quarter of fiscal year 20262027 was $113.6$115.0 million, an increase of $0.6$12.1 million, from $113.0$102.9 million in the thirdfirst quarter of fiscal year 2025.2026. Significant drivers included increased employee-related expenses, partially offset by reducedemployee-related, product developmentdevelopment, variable compensation, and stock-basedIT compensationand facilities-related costs induring the quarter.
Research and development expense for the first nine months of fiscal year 2026 was $326.5 million, a decrease of $4.8 million, from $331.3 million for the first nine months of fiscal year 2025, primarily due to reduced stock-based compensation and product development costs, partially offset by increased employee-related costs for the period.
Selling, general and administrative expense for the third quarter of fiscal year 2026 was $41.6 million, an increase of $2.6 million, from $39.0 million in the third quarter of fiscal year 2025, due primarily to increased professional services and stock-based compensation costs.
Selling, general and administrative expense for the first nine monthsquarter of fiscal year 20262027 was $120.0$42.4 million, an increase of $6.4$3.7 million, from $113.6$38.7 million forin the first nine monthsquarter of fiscal year 2025,2026, due primarily due to increased stock-basedemployee-related compensation,costs and professional services,fees employee-related expenses, and software maintenance contract costs. The increase was partially offset byfor the absence of non-recurring lease impairment costs incurred in the prior comparable period.quarter.
The Company reported interest income of $9.5$10.4 million and $27.3$8.8 million for the three and nine months ended DecemberJune 27, 2025, respectively,2026, and $8.4 million and $25.2 million for the three and nine months ended DecemberJune 28, 2024,2025, respectively. Interest income increased in the current period due to returns generated from higher combined average cash, cash equivalents and marketable securities balances, partially offset by marginally lower interest rates compared to the prior period.
The Company reported interest expense of $0.2$0.3 million and $0.7$0.2 million for the three and nine months ended DecemberJune 27, 2025, respectively,2026, and $0.2 million and $0.7 million for the three and nine months ended DecemberJune 28, 2024,2025, respectively. Interest expense consists primarily of commitment fees and debt issuance cost amortization associated with the Company's Revolving Credit Facility (see Note 8 - Revolving Credit Facility of the Notes to the Consolidated Condensed Financial Statements).
Other Income (Expense)
For the three and nine months ended DecemberJune 27, 2025, the Company reported other income of $0.2 million2026 and other expense of $0.2 million, respectively. For the three and nine months ended DecemberJune 28, 2024,2025, the Company reported other expense of $0.2$0.4 million and $1.4$0.4 million in other income,million, respectively. This activity primarily related to non-investment related income (expense) and remeasurement on foreign currency denominated monetary assets and liabilities.
Our income tax expense for the first quarter of fiscal year 2027 was $17.3 million compared to $19.9 million for the first quarter of fiscal year 2026, resulting in effective tax rates of 18.4 percent and 24.7 percent, respectively.
Our income tax expense for the third quarter of fiscal year 2026 was $22.1 million compared to $37.7 million for the third quarter of fiscal year 2025, resulting in effective tax rates of 13.6 percent and 24.5 percent, respectively. Our income tax expense was $63.9 million and $90.1 million for the first nine months of fiscal years 2026 and 2025, respectively, resulting in effective tax rates of 16.1 percent and 25.7 percent, respectively.
EffectiveThe effective tax ratesrate for the first quarter of fiscal year 2027 was lower than the prior period presented, primarily due to the July 4, 2025 wereenactment of the One Big Beautiful Bill Act that reinstated immediate expensing of U.S. R&D expenditures. The effective tax rate for the first quarter of fiscal year 2026 was unfavorably impacted by a provision in the Tax Cuts and Jobs Act of 2017 provision that required researchworldwide and development (“R&D”) expenditures incurred in tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years depending on the location in which the research activities are conducted,amortized, which resulted in increased GILTI inclusions in thesethe periods.period, In addition, those periods were unfavorably impactedand by U.S. tax rules related to refundable tax credits, including R&D expenditure credits available to us in the United Kingdom, that reducereduced the amount of foreign tax credits available to offset GILTI.
The effective tax rates for the third quarter and first nine months of fiscal year 2026 were lower than the prior periods presented due to U.S. R&D expenditures no longer being capitalized within GILTI (also known as net controlled foreign corporation tested income) beginning in fiscal year 2026, as a result of the One Big Beautiful Bill Act (“OBBBA”), enacted on July 4, 2025.
Cash generated from our operating activities is net income adjusted for certain non-cash items and changes in working capital. Cash generated from operations was $499.2$64.1 million for the first ninethree months of fiscal year 20262027 versus $314.0$116.1 million generated for the corresponding period of fiscal year 2025.2026. The cash flow from operations during the first ninethree months of fiscal year 20262027 was related to the cash components of our net income and a $55.8 million favorable change in working capital, primarily as a result of decreases in inventory and prepaid wafer balances (related to the Capacity Reservation Agreement), partially offset by increases in accounts receivables, and decreases in taxes payable. The cash flow from operations during the corresponding period of fiscal year 2025 was related to the cash components of our net income and a $57.4$42.0 million unfavorable change in working capital, primarily as a result of increases in accounts receivables and inventory, and decreases in accounts payable and other accrued liabilities, partially offset by decreasesincreases in prepaid wafer balancesusage (related to the Capacity Reservation Agreement),. The cash flow from operations during the corresponding period of fiscal year 2026 was related to the cash components of our net income and a $27.4 million favorable change in working capital, primarily as a result of decreases in inventory, increases in prepaid wafer usage (related to the Capacity Reservation Agreement) and income taxes payable, andpartially offset by decreases in accounts payable and other accrued liabilities.
Net cash used in investing activities was $20.7$19.4 million during the first ninethree months of fiscal year 20262027 versus $111.2$6.2 million during the first ninethree months of fiscal year 2025.2026. The cash used in investing activities in the first ninethree months of fiscal year 20262027 was related to net purchases of marketable securities of $8.3$3.9 million and capital expenditures and technology investments of $12.4$15.5 million. The cash used in investing activities in the corresponding period in fiscal year 20252026 was related to net purchases of marketable securities of $91.6$3.4 million and capital expenditures and technology investments of $19.6$2.8 million.
Net cash used in financing activities was $240.0$35.0 million during the first ninethree months of fiscal year 20262027 and was primarily associated with stock repurchases for the period of $210.0$31.5 million. The cash used in financing activities during the first ninethree months of fiscal year 20252026 of $179.1$100.7 million was primarily associated with stock repurchases during the period of $161.0$100.0 million.
Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential future acquisitions of companies or technologies, inventory build, and commitments under the Capacity Reservation Agreementand Commitment Agreements with GlobalFoundries (discussed further in Note 12 - Commitments and Contingencies of the Notes to the Consolidated Condensed Financial Statements). We believe our expected future cash earnings, existing cash, cash equivalents, investment balances, and available borrowings under our Revolving Credit Facility will be sufficient to meet our capital requirements both domestically and internationally, in the short-term (i.e. the next 12 months) and in the long-term, although we could be required, or could elect, to seek additional funding prior to that time.
On JulyMay 8,4, 2021,2026, the Company entered into a secondthird amended and restated credit agreement (the “SecondThird Amended Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The SecondThird Amended Credit Agreement provides for a $300$350 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on JulyMay 8,4, 20262031 (the “Maturity Date”). The Revolving Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (“Subsidiary Guarantors”).Guarantors. The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.
On March 20, 2023, the Company, entered into the First Amendment (the “Amendment”) to its Second Amended Credit Agreement, with the lending institutions party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment updates the benchmark interest rate provisions to replace LIBOR with Term SOFR, for the purposes of calculating interest under the terms of the Second Amended Credit Agreement.
As of DecemberJune 27, 2025,2026, the Company had no amounts outstanding under the Revolving Credit Facility and was in compliance with all covenants under the SecondThird Amended Credit Agreement.
CRUS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 13 filings (6 insiders, 12 trade dates, 38,613 shares, about $6.2M; 11 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -38,613 (purchases minus sales); net value about -$6.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-21 | Baumgartner Jeffrey W |
Open-market sale |
1,166 | $119.00 | $138.8K |
| 2026-08-20 | Baumgartner Jeffrey W |
Open-market sale |
1,166 | $117.89 | $137.5K |
| 2026-07-29 | Tupman David J. |
Grant/award | 1,998 | — | — |
| 2026-07-29 | Mosley William D |
Grant/award | 1,998 | — | — |
| 2026-07-29 | Lego Catherine P |
Grant/award | 1,998 | — | — |
| 2026-07-29 | Le Duy Loan T |
Option exercise | 1,998 | — | — |
| 2026-07-29 | Hussain Muhammad Raghib |
Grant/award | 1,998 | — | — |
| 2026-07-29 | Davern Alexander M |
Grant/award | 1,998 | — | — |
| 2026-07-20 | Baumgartner Jeffrey W |
Open-market sale |
1,166 | $138.57 | $161.6K |
| 2026-07-01 | Baumgartner Jeffrey W |
Open-market sale |
1,458 | $145.97 | $212.8K |
| 2026-07-01 | Baumgartner Jeffrey W |
Option exercise |
1,458 | $68.56 | $100.0K |
| 2026-06-29 | Brannan Andrew |
Open-market sale |
6,464 | $144.71 | $935.4K |
| 2026-06-29 | Brannan Andrew |
Option exercise |
6,464 | $88.00 | $568.8K |
| 2026-06-22 | Baumgartner Jeffrey W |
Open-market sale |
1,170 | $168.23 | $196.8K |
| 2026-06-03 | Thomas Scott |
Option exercise |
1,300 | $78.00 | $101.4K |
| 2026-06-03 | Thomas Scott |
Open-market sale |
1,300 | $180.04 | $234.1K |
| 2026-06-02 | Baumgartner Jeffrey W |
Option exercise |
3,907 | $41.49 | $162.1K |
| 2026-06-02 | Baumgartner Jeffrey W |
Open-market sale |
3,907 | $168.54 | $658.5K |
| 2026-05-29 | Brannan Andrew |
Open-market sale |
1,645 | $175.75 | $289.1K |
| 2026-05-29 | Baumgartner Jeffrey W |
Option exercise |
10,000 | $38.34 | $383.4K |
| 2026-05-29 | Baumgartner Jeffrey W |
Open-market sale |
11,171 | $171.65 | $1.9M |
| 2026-05-21 | Brannan Andrew |
Option exercise | 925 | — | — |
| 2026-05-21 | Brannan Andrew |
Shares withheld for tax | 463 | $166.62 | $77.1K |
| 2026-05-21 | Thomas Scott |
Shares withheld for tax | 425 | $166.62 | $70.8K |
| 2026-05-21 | Thomas Scott |
Option exercise | 1,080 | — | — |
| 2026-05-21 | Grode Denise |
Shares withheld for tax | 282 | $166.62 | $47.0K |
| 2026-05-21 | Grode Denise |
Option exercise | 925 | — | — |
| 2026-05-21 | Forsyth John |
Shares withheld for tax | 2,429 | $166.62 | $404.7K |
| 2026-05-21 | Forsyth John |
Option exercise | 6,171 | — | — |
| 2026-05-21 | Dougherty Justin E |
Open-market sale | 2,000 | $166.50 | $333.0K |
| 2026-05-21 | Dougherty Justin E |
Shares withheld for tax | 419 | $166.62 | $69.8K |
| 2026-05-21 | Dougherty Justin E |
Option exercise | 1,080 | — | — |
| 2026-05-21 | Baumgartner Jeffrey W |
Shares withheld for tax | 419 | $166.62 | $69.8K |
| 2026-05-21 | Baumgartner Jeffrey W |
Option exercise | 1,080 | — | — |
| 2026-05-21 | Alberty Carl Jackson |
Option exercise | 1,080 | — | — |
| 2026-05-21 | Alberty Carl Jackson |
Shares withheld for tax | 419 | $166.62 | $69.8K |
| 2026-05-20 | Davern Alexander M |
Open-market sale | 1,000 | $159.00 | $159.0K |
| 2026-05-08 | Forsyth John |
Open-market sale |
5,000 | $170.41 | $852.0K |
Well-known investors holding CRUS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,116,404 | $164.4M | 0.06% | Added 10% |
| Millennium Management (Israel Englander) | 2026-06-30 | 735,160 | $109.2M | 0.07% | Added 338% |
| Renaissance Technologies | 2026-06-30 | 357,720 | $53.1M | 0.07% | Added 58% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 322,885 | $48.0M | 0.11% | Added 5% |
| D. E. Shaw & Co. | 2026-06-30 | 105,639 | $15.7M | 0.01% | Added 70% |
| Two Sigma Investments | 2026-06-30 | 74,273 | $11.0M | 0.01% | Added 13% |
| Bridgewater Associates | 2026-06-30 | 40,733 | $6.1M | 0.02% | Added 26% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 40,672 | $5.9M | — | Sold out |