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Audio-chip developer Cirrus Logic (NASDAQ: CRUS) reported its fiscal second-quarter results after the market closed on Nov. 1.
Revenue once again declined at a double-digit rate, as weak demand for smartphones put pressure on the company's ability to grow. Cirrus is working to diversify and deliver content gains in Android devices, and the company hopes that will allow it to return to growth next year.
Cirrus Logic: The raw numbers
| Metric | Q2 2019 | Q2 2018 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $366.3 million | $425.5 million | (13.9%) |
| GAAP net income | $58.2 million | $73.3 million | (20.6%) |
| Non-GAAP earnings per share | $1.08 | $1.36 | (20.6%) |
Data source: Cirrus Logic. GAAP = generally accepted accounting principles.
What happened with Cirrus Logic this quarter?
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Revenue from portable audio products was $324.0 million, down 15.1% year over year.
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Revenue from non-portable audio and other products was $42.3 million, down 3.2% year over year.
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Cirrus said that some revenue shifted into the second quarter from the third quarter, allowing the company to beat its revenue guidance. The company pointed to the timing of the Golden Week holiday in China for the shift.
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The year-over-year revenue decline was due to reduced unit volumes of one of Cirrus's digital headset products.
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Cirrus generated 82% of its revenue from Apple, its largest customer. That's up from 76% in the first quarter.
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GAAP gross margin was 50.5%, up from 48.9% in the first quarter.
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Cirrus ended the quarter with $396 million of cash, up from $386 million at the end of the first quarter.
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Cirrus spent $55 million on share repurchases during the second quarter.
Cirrus provided the following guidance:
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Third-quarter revenue is expected to come in between $360 million and $400 million, down from $482.7 million in the prior-year period.
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Third-quarter GAAP gross margin is expected to be between 49% and 51%.
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Third-quarter GAAP research and development and sales, general, and administrative expenses are expected to be between $122 million and $128 million.
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Cirrus remains confident in its ability to return to revenue growth in fiscal 2020.
Image source: Getty Images.
What management had to say
Cirrus CEO Jason Rhode gave an update on the company's Android progress during the earnings call: "Further, after our initial win in a single smartphone model last quarter, we expanded our footprint with one of the largest Android OEMs [original equipment manufacturers] and are now shipping boosted amplifiers and multiple models. We expect additional flagship devices utilizing our technology to launch over the next six months."