Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year 2025 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up a call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.

Thank you, and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic’s Chief Executive Officer, and Ulf Habermann, our Interim Chief Financial Officer. Today, at approximately 4 p.m. Eastern Time, we announced our financial results for the third quarter, fiscal year 2025. The shareholder letter discussing our financial results, the earnings press release, and the webcast of this Q&A session are all available at the company's Investor Relations website. This call will feature questions from the analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's Investor Relations website. Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic’s website, and the latest Form 10-K, as well as other corporate filings registered with the Securities and Exchange Commission, for additional discussion of risk factors that could cause actual results to differ materially from current expectations. Now I'd like to turn the call over to John.

Thank you, Chelsea, and welcome to everyone joining today's call. As you've seen in the press release, in the December quarter, Cirrus Logic delivered revenue of $555.7 million, above the top end of our guidance range. In a moment, I'm going to hand the call over to Ulf to discuss the financial results for the quarter in detail, as well as our outlook for the March quarter. But before we move on to that, I'd like to make a few comments about the recent progress we've made on our company strategy. As many of you are aware, our long-term strategy for growth at Cirrus is based around three principles. First, maintaining leadership in our core flagship smartphone audio business. Second, expanding the value and range of high-performance mixed-signal functionality in which we serve our customers in smartphones and similar products. And third, leveraging that world-class expertise and IP in both audio and high-performance mixed-signal areas to grow and broaden our business in new markets. I want to now speak to our recent progress in each of those areas. In our flagship smartphone audio business, during the quarter, we were delighted with the success of our latest generation custom-boosted amplifier and our first 22-nanometer smart codec, both of which began shipping in recent smartphones. These products represent years of engineering effort and a deep and collaborative relationship with our customer. We're proud of the crucial role they play in enhancing the power efficiency and exceptional audio quality of our customers' latest products. We also anticipate that these components will be used in multiple generations of smartphones over a number of years, giving us excellent longer-term visibility and an opportunity for sustained revenue contribution. Outside of our custom audio solutions, we also continue to engage with customers with our general market products on next-generation flagship smartphones. And during the December quarter, a leading Android OEM introduced their latest flagship smartphone featuring three Cirrus Logic components, including two boosted amplifiers and a haptic driver. Beyond audio, our goal is to continue to broaden our high-performance mixed-signal content in smartphones, where we see a meaningful opportunity to not only expand our addressable market but also to grow and diversify our revenue. Our progress in this area has been demonstrated through the continued success of our camera controller product line, as the total value of our camera content has increased over the last few years. With the latest generation of devices, we are benefiting from a more favorable overall mix of smartphones on the market that include these camera controllers. And this more favorable mix contributed to today's robust results. We also believe there is significant potential to continue to grow value in this area in the future, and we are today investing in a roadmap of further products and features in pursuit of that goal. Beyond camera controllers, we have also seen strong interest in our capabilities around battery and power. Currently, we have a number of R&D programs underway related to these areas, and we continue to be excited about the long-term opportunity these areas represent for further growth and diversification of our revenue. The third principle of our strategic plan is to leverage our audio and high-performance mixed signal expertise into new applications and markets outside of smartphones, such as laptops. Although we are still in the early stages of revenue contribution from our components, we were pleased with the milestones we achieved during the past few months. First, our audio solutions were featured as part of the Intel Arrow Lake reference design. Second, amid a significant number of laptop announcements at CES 2025, a leading laptop OEM introduced a high-volume commercial mainstream laptop that utilizes the Soundwire interface and features our latest PC codec and power conversion IC. Lastly, we're excited to have started sampling our next-generation PC amplifier and codec, which we anticipate will broaden our portfolio further and address a wider range of the laptop market as customers seek to deliver improved performance across tiers and retail price points. While we are very excited about our potential for growth in the PC market, we also see opportunities to expand our business in other new markets. As part of this effort, during the quarter, we began sampling a series of timing products designed to enable superior audio experiences in automotive and professional audio applications. We're encouraged by the early customer interest and the strategic opportunities ahead of us in these markets. Finally, before we get into the deep dive on our results, I'd like to take a moment to highlight the leadership announcement we made earlier today. We're delighted that Jeff Woolard will be joining Cirrus Logic as Chief Financial Officer later this month. Jeff brings considerable experience in the semiconductor industry, as well as a proven track record in finance, strategy, and M&A. I believe his deep industry knowledge and financial expertise will be a considerable asset as we continue to execute on our strategy to drive growth in our existing business while expanding into new markets. All of us at Cirrus are excited to have Jeff join the team. I'd also like to take this opportunity to thank Ulf Habermann for his leadership as Interim Chief Financial Officer while we conducted this search. Ulf is an outstanding member of the Cirrus Logic organization, and I look forward to continuing to work with him in his role as Principal Accounting Officer, Treasurer, and Senior Vice President of Finance. And with that, let me now turn the call over to Ulf to provide an overview of our financial results, as well as the outlook.

Thank you, John, and good afternoon, everyone. I will start with a summary of our financial results for the third quarter fiscal 2025, and then provide guidance for Q4 FY’25. In Q3 FY’25, we delivered revenue of $555.7 million significantly above the top end of our guidance range due to stronger than expected demand for products shipping into smartphones. On a sequential basis, revenue was up 3%, primarily due to higher smartphone unit volumes. On a year-over-year basis, sales were down 10%, primarily driven by lower smartphone unit volumes, in part due to the timing of our fiscal quarters. This was partially offset by increased revenue associated with our latest generation product. Also, as we indicated in our Q2 FY’25 shareholder letter, when comparing our December quarter to the equivalent quarter last year, we would note that in FY’25, our December quarter began one week later. Thus, it encompassed one week less of the higher volume production associated with typical seasonal product trends. Additionally, in FY’25, our December quarter included one less week of revenue when compared to the equivalent quarter the prior year, as FY’24 was a 53-week fiscal year. Turning to gross profit and gross margin, non-GAAP gross profit in the quarter was $298.1 million, and non-GAAP gross margin was 53.6%. On a sequential basis, the gross margin increase of 140 basis points was mostly driven by a shift and mix towards higher margin products, and to a lesser extent, lower supply chain costs. The 230 basis point increase year-over-year was due to a shift and mix towards higher margin products. This was partially offset by higher inventory reserves and supply chain costs. Now I'll turn to operating expenses. Non-GAAP operating expense for the third quarter was $129.2 million. On a sequential basis, OpEx was up $2.5 million, primarily due to higher employee-related expenses. This was offset by a reduction in product development costs. On a year-over-year basis, operating expense was up $3.6 million, largely due to higher employee-related expenses. This was partially offset by an increase in R&D incentives. Non-GAAP operating income for the quarter was $168.9 million, for 30.4% of revenue. Turning now to taxes. For the December quarter, our non-GAAP tax rate was 21.8%, in line with our previous guidance. And lastly on the P&L, non-GAAP net income was $138.3 million, resulting in earnings per share for the December quarter of $2.51. Let me now turn to the balance sheet. Our balance sheet continues to be strong, and we ended the December quarter with $816.6 million in cash and investments. Our ending cash and investments balance was up $110 million from the prior quarter, as cash generated from operations was partially offset by share repurchases. We continue to have no debt outstanding, and have $300 million undrawn on our revolver. Inventory at the end of the third quarter was $275.6 million, up from $271.8 million in Q2 FY '25. Days of inventory were up slightly sequentially, and we ended the quarter with approximately 98 days of inventory. Looking ahead, in Q4 FY '25, we expect an increase in inventory dollars from the prior quarter. We anticipate inventory will continue to increase and peak in the first half of FY '26 as we continue to fulfill demand and manage our wafer purchase commitments for our long-term capacity agreement with GlobalFoundries. Turning to cash flow. Cash flow from operations was $218.6 million in the December quarter, and CapEx was roughly $6.7 million, resulting in non-GAAP free cash flow margin of roughly 38%. And for the trailing 12-month period, cash flow from operations was $484.5 million and CapEx was roughly $27.3 million. This resulted in non-GAAP free cash flow margin of roughly 25%. On the share buyback front, in Q3, we utilized $70 million to repurchase approximately 679,000 shares of our common stock at an average price of approximately $103. At the end of Q3 FY '25, the company had $154.1 million remaining in its share repurchase authorization. We expect to continue to return capital in the form of stock repurchases, which we believe will provide a long-term benefit to shareholders going forward. Now on to the guidance. For Q4 of FY '25 we expect revenue in the range of $350 million to $410 million. GAAP gross margin is expected to range from 51% to 53% and non-GAAP operating expense is expected to range from $119 million to $125 million. We expect our FY '25 non-GAAP tax rate to be approximately 22% to 24%, unchanged from our previous guidance. This range is slightly higher than our FY '24 tax rate, which was impacted by a favorable catch-up benefit related to updated IRS guidance on the R&D capitalization rules. In closing, we delivered strong results for the December quarter as we continue to execute on our strategy to grow our business and drive long-term shareholder value. Before we get into Q&A, I would like to note that while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship. With that, let me now turn the call to Chelsea to start the Q&A session.

Thanks, Ulf. We will now start the Q&A portion of the earnings call. Please limit yourself to a single question and one follow-up. Operator, we are now ready to take questions.

We'll take our first question from Tore Svanberg with Stifel. Please go ahead.

Thank you, and congratulations on the results, especially the cash flows. I have a question about your timing business, John. This is obviously new, and I was curious if you are utilizing the old MEMS IP you have, or should I consider this technology as something developed more recently?

Thank you, Tore. Yes, this is not leveraging MEMS IP. When we got out of MEMS, we really did get out of MEMS. This is a new IP we've developed with a few opportunities in mind that we see for this technology. One of those we mentioned in the series of announcements last year around the Pro audio market. And then one of the other key target markets for that is the automotive market. So that's very much a long-term project for us, just given the lead time and the lag in the auto industry. So we don't expect anything material around that for several years. But we have, over the past year, seen really great interest from customers in audio parts for automotive, haptic parts for automotive, and timing products for automotive. And as in-car networks become more prevalent and there are more audio zones and more speakers and more children and so on, the need for low-jitter clocks, and great timing products increases, and that's what we're serving there. So as I say, it's very much a long-term project, although that particular product or some of those products have been already specified as part of a future platform by at least one Tier 1 OEM. So we're very optimistic about it long term, but it will be some time before it moves the needle.

Very good. And as my follow-up, so I do know you're in a fiscal year, but this is the beginning of a new calendar year. Obviously, you have content growth sort of happening pretty consistent every year because of the cascading effects and so on and so forth. But as we think specifically about calendar ‘26, is this going to be more sort of a unit growth year? Or is there some more material content growth that you could potentially speak to?

Yeah. I think we always stop shy of talking about unannounced customer products, obviously, but I have previously said this isn't a major content year for us on the smartphone side. That said, we always aim to be in a position to grow in a flat unit environment. We don't want to be depending on unit tailwinds. We can do better than that. So we do still see some favorable tailwinds over the next year. One of those in the smartphone space, of course, is that cascading effect, in particular, we see that kind of continued year-on-year accretion of the value of our camera content. That gives us a favorable tailwind as we go into the next cycle. And then, of course, we're anticipating growing momentum in the laptop space this year as well.

Our next question comes from the line of Thomas O'Malley with Barclays. Please go ahead.

Thank you, John, for answering my question. I appreciate it. My question is about the quarter's performance. You did a great job last time discussing the differences between this December and December 2023. It seems like, based on the potential for an additional week of sales, you performed even better than initially guided. Can you explain what transpired? You mentioned units in the shareholder letter. Was this a consistent trend throughout the quarter, or did something occur during the quarter that contributed to the improved unit results?

Yeah, Tom, thank you. That's a great question. Actually, one of the things that we saw during the December quarter was more sustained demand than would be typical for a December quarter pattern. So I've said elsewhere that it's not unusual, in fact, in the majority of years, we'd see some kind of demand modulation during the December quarter just as the channel gets stopped and there's a read on the demand at the end user level for the devices. Actually, what we saw in this quarter was really the demand that we saw from our customer was very steady and in fact, increased slightly relative to when we guided. And then, of course, that was one of the factors along with new content from us there that drove the strong results.

And then if I look at your June quarter as well as in the March quarter, I know that you guys can't tell what devices you're being shipped into, but you can see mix particularly given that you've updated the codec in this last generation. So has there been any mix shift to any more of the legacy product that you're shipping at the end of the December quarter or into the March quarter to this point? I just want to understand if there's any mix dynamic that's changing here into the March quarter at all. Thank you.

I don't think we've observed any significant changes in the mix of devices. We can clearly identify what is being shipped to new devices, but for older generation devices or products using long-standing devices, our understanding is limited. We don't know the specific breakdown. However, up until now, from the December quarter to the present, I haven't seen any notable changes in the mix.

Our next question comes from the line of David Williams of The Benchmark Company.

Hey. Thanks for taking my questions. Congrats on a really solid quarter. I guess maybe my first question is just on the gross margin side. Clearly, a few different drivers there, and you pointed to some of those in the script. But if I'm not mistaken, like a record high, at least as hard my model goes back. So just kind of curious what the drivers are there and how much of that is really driven by the new products, maybe into your largest customer versus some of the products that are going into some of the other markets that you've had success in or with?

Certainly. We don't provide detailed breakdowns of the factors that influence gross margin, but it largely depends on our supply chain costs and product mix, which can vary significantly, especially during the launch of new products. Looking back at the entire fiscal year or recent quarters, we've shifted from expecting gross margins below our long-term average to reporting them above it. Initially, when we anticipated lower margins, it coincided with the beginning of new product launches, which typically brings challenges related to supply chain costs. The team has been focused on improving efficiency and reducing these costs as we ramp up new products. This work has significantly contributed to the results we announced, alongside the overall product mix.

Thank you for the information. As a follow-up, I would like to know the market size for laptops. It seems you have some new products that are being targeted at a broader audience. Could you share your expectations for that and what the laptop market might look like in terms of revenue over the next couple of years? Thank you.

Certainly. If we consider the overall laptop market, it falls between 200 million and 220 million units, based on various research sources. We believe we can capture nearly half of that market. The new products mentioned in our shareholder letter play a key role in this strategy, allowing us to support a wider range of price tiers and configurations, including different audio architectures. We see anything priced above $800 as particularly relevant, though we may also target products below that price point. This approach positions us firmly within the mainstream market and grants us access to about half of the total market. Within this unit range, we expect a diverse array of content configurations, spanning from single-piece content to more complex setups that could include amplifiers, haptics, power converters, and codecs. Looking ahead, while I won’t specify a revenue figure for the next couple of years, we anticipate sustained growth opportunities. Previously, I noted that our revenue contribution in the PC market would be minimal in fiscal '24, aiming for low tens of millions in fiscal '25. As we move closer to the end of fiscal '25, we are on track with that goal. Based on the demand we are seeing, we expect revenue to roughly double in fiscal '26, with considerable potential for significant growth in the years following.

Our next question comes from the line of Christopher Rolland with Susquehanna. Please go ahead. Christopher, your line might be on mute.

Thank you. Thank you, operator. So you guys used to talk about HPMS being potentially at parity with audio as a percentage of revenue at some point in the future? And then obviously, this is a strong cycle for audio for you guys. I think audio was 62% of total. So I guess my question is, do you still expect HPMS to match audio at some point in the future? And what might be a rough time frame for this? Is it a year or two years or much more than that? And what has to happen for parity there between those segments? Thanks.

Yeah. Thanks, Chris. I do think so. Yeah, it's not in a year, I don't think. But as we look a bit further out within our planning horizon, it is certainly something that we think is a very real opportunity. So yeah, we are in a period where actually our audio content accelerated a bit in this fiscal year. We're obviously very happy about that. So the kind of parity point was really to convey how large of an opportunity we see with HPMS. It's not that we don't want to grow audio as well, obviously. But when we look further out, really, HPMS actually represents the larger part of the SAM that we see ahead of us. So in our investor presentation, you'll see we talk about a roughly $9 billion SAM in 2028 that we think is in front of us. And audio comes in at just a little over third of that. So we see significant opportunity to expand in HPMS and that is kind of disproportionately large relative to audio. And as I've said previously, that will be a mixture of components, whether that's a camera or haptics or power related. We have a number of irons in the fire on the HPMS front and believe that they all represent a good opportunity to drive growth.

Thank you, John. And also in the letter, it's a good segue into power. So you spoke about a number of R&D programs for battery and power management. I guess, first of all, I was wondering if you could talk about the investment when you think that investment in R&D might peak. And then are these products ready for revenue today? Or when might we see these products ramping for revenue?

Thank you, Chris. We are currently shipping various power-related products that generate revenue, both in our custom silicon business and in the broader market. This includes products for Android devices and laptops. Regarding our investments that are not yet visible externally, we see many potential growth opportunities in additional power areas. Specifically, we're focusing on power control, conversion, and sensing, especially related to battery technology. We aim to leverage our high-precision sensing capabilities along with digital control and signal processing integrated with analog solutions. Right now, we possess impressive intellectual property in silicon, some of which has been presented to customers, and more will be showcased soon. We are following our established strategy to advance these innovations towards market adoption. We are still some time away from that, but we'll provide more updates as progress occurs. We understand the process of securing high-value sockets in the high-performance mixed-signal domain, and we recognize the necessity of presenting innovative IP in silicon. At this stage, we feel confident about our IP within test silicon and look forward to advancing from here.

Our next question comes from the line of Gary Mobley with Loop Capital. Please go ahead.

Hi, everybody. Thanks for taking my question. I know you're not going to give too many details or any with respect to your largest customer. But clearly, there's a lot of early speculation that maybe that largest customer might move to a multi-lens horizontal configuration for camera, especially at the premium tier, maybe some thinner designs in the lower tier and maybe even some foldable designs and without maybe talking about your customers specifically there, maybe if you can just talk in general about how those types of configurations and designs might affect your content in camera haptics, power-related content and what not?

We are very proud of our achievements over the past few years in fostering innovation in cameras. Last fall, we launched our fifth consecutive generation of camera controllers, which have been integrated into customer products. There have been significant innovations during this period, and I believe this area is where we collaborate most closely with our customer teams on future technologies. We are making substantial investments to enhance features and functionality for the future, though we must be discreet about the details involved. When we consider various form factors and devices, including those with hinges, we recognize the opportunities presented, especially in audio and potentially haptics. For several years, we have been providing solutions for foldable devices, which creates unique challenges and opportunities. Devices often have multiple usage modes, both folded and unfolded, leading to various audio configurations that require additional microphones and processing tailored to different orientations. These factors drive the demand for new features and requirements in the novel form factor devices we have been producing for some time.

Okay. Appreciate that. As my follow-up, I wanted to ask about the Android win that you highlighted in your prepared remarks. I think you mentioned 3 audio products in use there. And I presume this is for some of your general-purpose products. I don't think you really go into the Android market with application-specific products or custom products. So my question is, with this general-purpose approach into the Android market, are there ample opportunities? And could it ever be a sizable portion of revenue for you?

When we think about Android, I've been pretty clear over the past couple of years that we treat that largely on an opportunistic basis. And the reason for that is that we anticipated headwinds in China, largely due to geopolitical reasons and because we feel there are larger opportunities for us elsewhere. So for example, in the laptop space. So as of right now, we don't make a lot of R&D investment in the Android space, but we continue to win flagship sockets in both audio and haptic with multiple Android OEMs based on products that we have today. And those are leveraging IP that we've developed over the years. And have shipped into many, many Android phones. So we continue to serve our customers there and grow revenue where we can and win sockets where we can and where that's kind of economically attractive to us. But the focus for our R&D investment is on growing in other markets.

And we have time for one more question.

Our final question comes from the line of Tore Svanberg with Stifel. Please go ahead.

Thank you. I have a follow-up question. Your SG&A has remained around 6% of revenue for many years. As you explore new markets, do you need to invest in a new sales organization, or can we consider your entry into the automotive market to be more similar to laptops, where the approach relies more on reference design and doesn't require a large sales force?

I would say, Tore, if you think about it, the SG&A level that we're at, we're pretty comfortable with. I don't see that significantly changing into the future even if we tackle new markets. We do have opportunities to also look at where our existing investments are. We allocate that a bit. And I don't see us growing that to support those markets.

And with that, we will end the Q&A session, and I will now turn the call back over to John.

Thank you, Chelsea. In summary, in the third quarter of fiscal year '25, Cirrus Logic achieved impressive results for the December quarter driven by strong demand for components shipped to smartphones. We are continuing to make good progress in our three key strategic areas and are very enthusiastic about the opportunities ahead. I appreciate your ongoing interest in our developments and would like to thank our employees for their exceptional dedication and commitment. Thank you for being part of today's call. Goodbye.

That will conclude today's call. Thank you all for joining. You may now disconnect.